rutin tity supplied will increase by 0.1%. d The quantity supplied will decrease
ID: 1105661 • Letter: R
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rutin tity supplied will increase by 0.1%. d The quantity supplied will decrease by 10%. 12. In order to prove that video games and a game console are complements in consumption, one should measure the and get a a. price elasticity of demand; number greater than 1 (in absolute value) b. price elasticity of demand; number less than 1 (in absolute value) c. cross-price elasticity; positive d. cross-price elasticity; negative number 13, Jerry's income increases by 20%. As a result, the quantity of a good he demands increases by 5%..we can say that this good is for Jerry. normal and a necessity inferior normal and a luxury inferior and a luxury c. d. 14. If firms do NOT increase their quantity supplied when price changes, then supply is a. perfectly elastic perfectly inelastic. relatively inelastic. c. d. a.) Price ceilings and price floors decrease economic efficiency c. The government proposes a tax on imported champagne. Buyers will bear the entire burden d. Economists have shown that the burden of a tax is the same whether the tax is collected from elastic. 15. Which of the following statements is FALSE? Rent control puts a legal limit on the rent that landlords can charge for an apartment of the tax if the demand curve is horizontal. the buyer or the seller.Explanation / Answer
12. D. Cross price elasticity measures the responsiveness of quantity demanded of one good due to the change in price of another, other things remaining the same. Complements have a negative cross price elasticity, as the price of one good goes up the quantity demanded of another good goes down.
13. A. Normal good and a necessity. Income elasticity is the percent change in quantity demanded divided by the percent change in income. The percent change in quantity demanded is 5%, and percent change in income is 20%, therefore, the income elasticity of demand is 5%/20% =0.25. Since the income elasticity of demand is positive it is a normal good and since is below 1, it is a necessity.
14. b. Elasticity of supply measures the responsiveness of quantity supplied due to change in price of the good. The supply curve is vertical, the quantity supplied will be the same regardless of the price
15. A. Price floors and price ceilings create deadweight loss as the market price and quantity are not in equilibrium.
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