QUESTION 13: If the price elasticity of demand is 1.5, regardless of which two points on the demand curve are used to compute the elasticity, then demand is:
a. perfectly inelastic, and the demand curve is vertical.
b. perfectly elastic, and the demand curve is horizontal.
c. elastic, and the demand curve is a straight, downward-sloping line.
d. elastic, and the demand curve is something other than a straight, downward-sloping line.
QUESTION 14: For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
a. The good is a necessity.
b. The market for the good is narrowly defined.
c. The relevant time horizon is long.
d. There are many substitutes for this good.