If a Firm Wanted to Know Whether the Demand for Its

question 58

Multiple Choice

If a firm wanted to know whether the demand for its product was elastic, unit elastic, or inelastic, then the firm could

• A)survey competitors and ask them what they think demand elasticity is for the product.
• B)talk to its customers.
• C)change price a little bit and observe what happens to total revenue.
• D)not do anything as there is no way to find an elasticity value.

Recognize and analyze different types of utility functions and their implications for consumer behavior.

Calculate consumer's optimal choice given budget constraints and prices.

Identify and explain the impact of income and price changes on consumer's demand.

Define and interpret key concepts such as Engel curves, indifference curves, and budget lines.

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Definitions:

Internal Tension

A state of mental or emotional strain arising from conflicting needs, desires, or external pressures.

A Drive

An internal motivated state that compels a person towards a specific behavior or goal.

Physiological Need

Basic physical requirements for human survival, such as air, water, food, shelter, and sleep. These needs are the first level in Maslow's hierarchy of needs.

Basic Bodily Requirement

Fundamental needs such as food, water, and shelter that are essential for survival.