3 pts Product differentiation increases the price elasticity of demand faced by a firm. True False
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Consider a competitive firm's demand for a factor of production as a function of the factor price when the prices of other factors are given. Let us consider two cases: 1) the quantity of output is fixed, and 2) the price of the product is fixed. The elasticity of demand is greater in the second case than in the first. Why? True, false, uncertain?
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'3. The fewer substitutes for a good, the higher its price elasticity of demand True False'
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Consider the demand curve above. If area 0ABC is smaller than area 0DEF, we may conclude that demand in this range is: A. inelastic B. elastic C. unit-elastic 11. The elasticity of demand for a product is likely to be greater: A. if the product is a necessity, rather than a luxury good. B. the greater the amount of time over which buyers adjust to a price change. C. the smaller the proportion of one's income spent on the product. D. the smaller the number of substitute products available. The elasticity of supply for a product will be 2.0 if: A. A 1 percent decrease in the price causes a 0.2 percent decrease in quantity supplied B. A 2 percent decrease in price causes a 1 percent decrease in quantity supplied C. A 1 percent decrease in price causes a 2 percent decrease in quantity supplied D. A 2 percent decrease in price causes a 2 percent decrease in quantity supplied
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