1) When demand is elastic -a price increase lowers total revenue. -the percentag
ID: 2440653 • Letter: 1
Question
1) When demand is elastic
-a price increase lowers total revenue.
-the percentage change in quantity demanded is greater than the percentage change in price.
-buyers are sensitive to price changes.
-All of the statements are true.
2) If Mrs. T.F. Baker buys 29 pairs of false eye lashes at the local drug store,
-she is definitely not enjoying a consumer surplus.
-she may or may not be enjoying a consumer surplus.
-she is definitely enjoying a consumer surplus.
3)
-decrease in supply.
-change in quantity supplied.
-change in supply.
-increase in supply.
4)
-$250.
-$400.
-$225.
-$200.
5) A change in the demand for automobiles may be caused by a _______________.
-All of these choices
-change in tastes and preferences
-change in income
-change in the price of gasoline
6) Suppose that, due to low profits, many individuals decide to leave the farming business. The effect of the exodus will be
-to decrease the prices of agricultural products.
-to increase the prices of agricultural products.
-to decrease the demand for agricultural products.
-to increase the demand for agricultural products.
7) If the income elasticity for Ramen Noodles is -3.0, we may conclude that Ramen Noodles are __________.
-both a normal good and an inferior good
-a inferior good
-a normal good
-neither a normal good nor an inferior good
8)
-M.
-K.
-L.
-J
9) Goods for which demand increases as income decreases are called
-substitute goods.
-complementary goods.
-inferior goods.
-normal goods.
10) When the average total cost is at its minimum, it is
-greater than MC.
-equal to MC.
-smaller than MC. MICROECONOMIC COURSE
Explanation / Answer
(1) (a)
When demand is elastic, a N% increase in price decreases quantity demanded by more than N%, thus lowering total revenue.
(2) (c)
A consumer will buy a good only if her maximum willingness to pay is higher than market price of the good, that is, when consumer surplus is positive.
(3) (b)
This is an upward movement along supply curve caused by a rise in price which increases quantity supplied.
(4) (a)
When output = 4, Total cost (TC) = Variable cost + Fixed cost = $800 + $200 = $1000
Average total cost = TC / Output = $1000 / 4 = $250
NOTE: As per Chegg Answering Policy, first 4 questions are answered.
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