11) If a business decreased the price of its production from $10 to $9
when the price elasticity of demand was inelastic, then total revenues
would:
a)decrease
b)increase
c)remain unchanged
d)be perfectly inelastic

12)If a good is a necessity, demand for the good would tend to be:
a)elastic
b)horizontal
c)unit elastic
d)inelastic

13) If a union argues that a price cut will boost revenues of the firm
and management argues that the opposite is true, then the price
elasticity of demand is:
a)unit elastic from the unions perspective and unit elastic from
managements perspective.
b)perfectly inelastic from the unions perspective and perfectly
elastic from the managements perspective.
c)elastic from the unions perspective; inelastic from managements
perspective.
d)inelastic from the unions perspective; elastic from managements
perspective.

14)If an increase in the supply of a product results in a decrease in
the price, but no change in the actual quantity of the product
exchanged, then:
a)the price elasticity of supply is zero.
b)the price elasticity of supply is infinite.
c)the price elasticity of demand is unitary.
d)the price elasticity of demand is zero.

15) If demand for farm crops is inelastic, a good harvest will cause
farm revenues to:
a) increase because of the increase in the quantity that farmers can
sell.
b)increase because of a downward movement along the supply surve,
encouraging an increase in demand.
c)decrease because of a percentage fall in price greater than the
percentage increase in quantity sold.
d)remain unchanged, because the increase in quantity that can be sold
will be matched by an equal decrease in price.

11. a) decrease.  "Price-inelastic demand (or inelastic demand).  The
situation in which price elasticity of demand is below 1 in absolute
value.  In this case, when price declines, total revenue declines...."
(page 744)

12. d) inelastic.  "For necessities like food, fuel, and shoes, demand
tends to be inelastic.  Such items are the staff of life and cannot
easily be foregone when their prices rise."  (page 70)

13. c) elastic from the union's perspective; inelastic from
management's perspective.  "Price-elastic demand (or elastic demand). 
The situation in which price elasticity of demand exceeds 1 in
absolute value....elastic demand implies that total revenue (price
times quantity) rises when price falls because the increase in
quantity demand it is so large.  (Contrast with price-inelastic
demand.)"  (page 744)

14. d) the price elasticity of demand is zero.  The increase in supply
eliminates answer a). The fact that the increase in supply caused the
price change, not the reverse, eliminates answer b).  If the price
elasticity of demand were unitary, then there would have been a change
in the actual quantity of the product exchanged, eliminating answer
c).  No increase at all in demand means that the price elasticity of
demand is zero.

15. c) decrease because of a percentage fall in price greater than the
percentage increase in quantity sold.  Because demand is price
inelastic, revenues will decrease.  See question 11.

Sincerely,

Wonko

Source: "Economics" 14th edition by Samuelson & Nordhaus, McGraw-Hill
Inc., 1992