There are many diet aids on the market. They promise immediate weight loss without
exercise or a change in diet. Each is accompanied by a testimonial from a satisfied user.
If you pay close attention, you will notice that each ad also contains the statement,
“Results may vary.” Most likely, this statement is included to prevent the FTC from
requiring the dietary aid distributor from having to
a. engage in self-regulation.
b. engage in comparative advertising.
c. issue an advertising injunction.
d. guarantee truth-in-advertising.
e. run corrective advertising.
Answer:
Elastic demand exists when
a. a small percentage decrease in price produces a smaller percentage increase in
quantity demanded and total revenue falls.
b. a small percentage decrease in price produces a larger percentage increase in quantity
demanded and total revenue increases.
c. an increase in price causes a larger increase in quantity demanded and total revenue
falls to zero.
d. the quantity demanded remains the same regardless of level of price and total
revenue is unchanged.
e. a small percentage decrease in price produces a smaller percentage decrease in
quantity demanded and total revenue increases.