) Bach wk a im stocks is kitchen with esaetly 100 bottles of water regardless of
ID: 1114503 • Letter: #
Question
) Bach wk a im stocks is kitchen with esaetly 100 bottles of water regardless of i g the work week What is this fir's wn pre All the bottles are consumed duri price elastivity of demand for bottles of water in absolute.vale (A) grvater than 1. B) less than I, but greater than ser (C) 1 (D) zero (e) The opportunity cost of receiving $10 in the futufe as opposed to getting that 810 today is: (A) the foregone interest that could be earned if you had the money today (B) the taxes paid on any earnings (C) the value of $10 relative to the total income of that person (D) the value of $10 relative to the total income of all persons (f) As additional firms enter an industry, the market supply curve (A) shifts to the left. (B) shifts to the right. (C) remains the same. (D) none of the statements associated with this question are correct. (g) If the following are prices and quantities demanded for a product, what is the absolute value of the own price elasticity at a price of ST 5 150 $7 100 (A) 0.57 (B) 1.75 (C) 0.02 (D) 1.24 (h) Consumer surplus is (A) the value consumers get from a supplier. (B) the value consumers do not pay because of a discount by supplier. (C) the value consumers get from a good but do not pay for (D) equal to the amount consumers pay for a good.Explanation / Answer
(d) Option (D)
When quantity is fixed and independent of a change in price, demand is perfectly inelastic and absolute value of elasticity is zero.
(e) Option (A)
Interest income is an opportunity cost.
(f) Option (B)
New entry increases market supply, shifting supply curve rightward.
(g) Option (D)
Own price elasticity = %Change in Q / (Change in P / Average P)
= [(100 - 150) / (100 + 150) / 2] / [$(7 - 5) / $(7 + 5) / 2]
= [- 50 / (250 / 2)] / [$2 / ($12 / 2)] = (- 50 / 125) / (2 / 6)
= - 1.2
Absolute value = 1.2
(h) Option (C)
Consumer surplus = Maximum willingness to pay by a consumer - Actual price paid by consumer
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