- 4 Pts 1 Suppose The Market Demand Curve For Pencils Is Characterized By Unitary Own Price Elasticity Everywhere Along 1 (87.94 KiB) Viewed 36 times
4 pts. 1. Suppose the market demand curve for pencils is characterized by unitary own-price elasticity everywhere along the curve. Given this characteristic, which of the following is necessarily true? a) The market demand curve is a straight line with slope = -1. b) The market demand curve is a straight, vertical line. c) The market demand curve is a straight, horizontal line. d) Consumer expenditure in the pencil market does not change when the price of pencils changes. e) Consumers decrease their consumption of pencils by 1% when the price of pencils increases by 10%. 3 pts. 2. Suppose Sean's preferences for X and Y (the only two goods available for consumption) are described by the "atypical" utility function U=X+3Y. Which of the following statements correctly characterizes this function? a) Sean views both X and Y as "bad" goods. b) As Sean consumes more X, his utility falls. c) The marginal utility of X is negative. d) As Sean consumes more X, the marginal utility of X falls. e) This function does not exhibit diminishing marginal utility of X.