CH,CCI AICI: SO Question 11: 36 decrease in the price of a good causes its quant

Question

CH,CCI AICI: SO Question 11: 36 decrease in the price of a good causes its quantity supplied to decrease by 176, then the price elasticity of supply is: A unit elastic B inelastic C. clastic D. perfectly inclastic mouth O b eschleun Question 12: If the quantity demanded of tea increases by 2% when the price of coffee increases by 8%, the cross-price elasticity of demand between tea and coffee is: A.-25 B. 0.25 C4 D. 4 Syy Question 13: Consider the following deadweight loss due to underproduction Deadweight Price dollars per pizza ?? 7 ?? 15 20 25 Quantity thousands of pizzas per day) This deadweight loss is: A. Incurred only by producers B. Incurred only by consumers C. Incurred both by consumers and producers D.) Incurred neither by consumers nor by producers, but by the government

Explanation / Answer

Q11. Answer is B. Inelastic Explanation: Price elasticity of supply: % change in supply/ % change in price (-1% /-3%) = 0.33 Q12. Answr is B. 0.25 Explanation: Cross elasticity of demand: % Change in demand of Tea/ % change in price of coffee 2% /8% = 0.25 Q13. Answer is C. Incurred both by consumer and producer

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