sers/dani9/Downloads/ECON%205 20-Hw 1 pdf B) S100; $30 C) S150; $110 D) $50; $40

Question

sers/dani9/Downloads/ECON%205 20-Hw 1 pdf B) S100; $30 C) S150; $110 D) $50; $40 Market B Market A Price si0 Price 8 0 2 4 68 10 Quantity 2 4 68 10 Quantity 0 Name: WID 2) Suppose that the demand curve in both markets shifts out by the same distance. The change in price will be larger in and the change in quantity will be larger in A) market A; market A B) market A; market B C) market B; market A D) market B; market B 3) Refer to the diagram on the right. Which of the following statements is TRUE? I. The price elasticity of demand is less than 1 in absolute value at prices less than $5. Price S12 1l 10

Explanation / Answer

Right Answer is (C)

Supply curve is relatively more elastic in market A, when there is change in demand, there would be larger increase in quantity.

Conversely, in market B supply curve is relatively less elatic, thus when demand shifts to right, it would largely be reflected on price of good.

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