26) a good with very low own-price demand elasticity? 1) Graph I 2 Graph J 3 Gra
ID: 1105896 • Letter: 2
Question
26) a good with very low own-price demand elasticity? 1) Graph I 2 Graph J 3 Graph K 4) Graph L 5) not enough information to answer] 27) demand for a good, like cigarettes, gasoline, medicine, etc., that consumers buy approximately the same amount of, seemingly regardless of price? 1) Graph I 2) Graph J 3) Graph K 4) Graph L 5) not enough information to answer] 28) demand for a good, like Caribbean cruises, jewelry, or other discretionary or luxury goods, that one might buy, when one has extra income and feels optimistic about the future? 1 Graph I 2) Graph J 3 Graph K 4) Graph L 5) [not enough information to answer] 29) supply of a good with very thin profit margins that is very sensitive to changes in input prices? 1) Graph I 2) Graph J 3 Graph K 4) Graph L 5) [not enough information to answer] 30 a fair price mandated to correct a market failure? 1) Graph I 2) Graph J 3 Graph K 4) Graph L 5) not enough information to answer]Explanation / Answer
(26) Option (2)
When own price elasticity is very low, demand is highly inelastic, and demand curve is very steep, as is seen in Graph J.
(27) Option (2)
When buyers buy approximately same quantity irrespective of price, the good's own price elasticity is very low, demand is highly inelastic, and demand curve is very steep, as is seen in Graph J.
(28) Option (5)
In this case demand will be highly elastic and demand curve will be very flat. None of the given graphs show an extremely flat demand curve (Note that graph I is blank), so there is insufficient information.
(29) Option (3)
When supply is highly sensitive to change in input prices, supply is highly elastic and the supply curve is very flat, as shown in graph K.
(30) Option (5)
A market failure may arise in presence of positive or negative externalities. A fair price may be in the form of a price ceiling or price floor. Multiple graphs conform to these criteria, so there is insufficient information.
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