When Joe's Gas raises its price for regular unleaded gasoline, total revenue from regular unleaded
gas falls to zero. It must be the case that
A) the demand for Joe's regular unleaded gasoline is perfectly elastic.
B) the demand for Joe's regular unleaded is inelastic.
C) there are not many good substitutes for Joe's regular unleaded gasoline.
D) consumers are switching to premium grades of gasoline

A

Diet Coke is a close substitute for Diet Pepsi. When Coca-Cola introduced Diet Coke in 1982, the
price elasticity of demand for Diet Pepsi ______ and PepsiCo's ability to raise revenues through price
increases ______.
A) increased; was reduced
B) increased; increased
C) decreased; was reduced
D) had no effect; was reduced

A

If the elasticity of demand for the latest Taylor Swift album is 1.4, this means
A) few substitutes for the her latest album exist.
B) a 1 percent increase in the price leads to a 14 percent decrease in quantity demanded.
C) a 10 percent decrease in the price leads to a 140 percent increase in quantity demanded.
D) a 5 percent increase in the price leads to a 7 percent decrease in quantity demanded

D

All else equal, compared to small-budget items such as paper towels, the price elasticity of
demand for big-ticket items such as refrigerators is
A) more elastic
B) unit elastic
C) more inelastic
D) has no effect on the own-price elasticity of demand

A