Question

1. If the price decreases by 4 percent. As a result, the quantity demanded increases by 12 percent. The price elasticity of demand is………...

2. What is the relationship between elasticity and revenue?

3. A 7 percent reduction in the price of a product has zero effect on the dollar amount of consumer expenditure on the product. The price elasticity of demand is………

4. What does the price elasticity of demand coefficient measures?

5. What is characteristic of the demand for a commodity that is elastic or inelastic or unit elastic?

6. What is unit elastic? When the price of a god goes up and demand is unit elastic, what would happen to the total revenue?

7. What is the basic difference between the short run and the long run?

8. What is the relationship between the total product and marginal product?

9. What is the relationship between the total cost concept and average cost concepts? For instance, if you know TC and Quantity, how do you calculate Average Total Cost?

10. What is the vertical distance between Total Cost and Total Variable Cost?

11. Define the Marginal Cost, Average Total cost, Average Variable cost, Average fixed cost?

12. What is an implicit cost?

13. What is an explicit cost?

14. What is the difference between implicit cost and explicit cost?

15. What is the difference between accounting profit and economic profit?

16. In economics total cost include________ (implicit or explicit or both?????)

Answer #1

1. Price elasticity of demand = percentage change in quantitity demanded / percentage change in price = 12/ (-4) = -3

The absolute value of elasticity is 3.

2. In case of inelastic demand, percentage change in quantitity demanded is less than percentage change in price. Therefore, when demand is inelastic, increase in price increases total revenue. That is, in case of inelastic demand, change in price and change in total revenue moves in the same direction.

But when demand elastic, a small increase in price will decrease the Quantitity demanded by a very large amount and therefore total revenue will decrease. So in case of elastic demand, change in price and change in total revenue moves in the opposite direction.

1.
The less sensitive quantity demanded is to a change in price,
the
A.
closer the absolute price elasticity of demand is to one.
B.
smaller the absolute price elasticity of demand.
C.
smaller a change in price must be to induce a certain change in
quantity demanded.
D.
greater the absolute price elasticity of demand.
2.
When increased demand raises the price of the product, the
A.
marginal revenue product will fall.
B.
sales will fall.
C.
marginal revenue...

5a)The price of car batteries increases by 10 percent and the
quantity demanded decreases by 10 percent. What is the price
elasticity of car batteries?
Unit elastic, and revenue will not change
Elastic, and revenue will increase
Elastic, and revenue will decrease
Inelastic, and revenue will increase
b)Good A and Good B have negative income elasticities, but Good
A is more negative than Good B. If the economy’s income increases,
which of the following is true?
Good A’s demand will...

8.
When the price increases by 30 percent and the quantity demanded
drops by 30 percent, the price elasticity of demand is
unitary elastic.
elastic.
perfectly inelastic.
inelastic.
perfectly inelastic.
9.
If the cross-price elasticity of demand between Good A and Good
B is 2 and the percentage change in price of Good A is 5 percent,
what is the percentage change in quantity demanded of Good B?
-3 percent
1.50 percent
10 percent
3 percent
-1.25 percent

Price elasticity of demand is a measure of how responsive a
change in quantity demanded is to a change in:
Question 32 options:
interest rate.
price.
consumer preferences.
supply.
Question 33 (10 points)
The _______ is the amount by which an additional unit of
activity increases its cost.
Question 33 options:
average cost.
marginal benefit.
marginal cost.
average profit.
Question 34 (10 points)
The Inverse Elasticity Rule states:
Question 34 options:
the lower the elasticity, the lower the price.
the...

A price change causes the quantity demanded for a good to
increase by 20 percent and the total revenue of that good decreases
by 15 percent. What can you say about the price elasticity of
demand at this point.
It's elastic
It's inelastic
It's unitary elastic
It's perfectly elastic

When the price of Milo increases from RM2 to RM3, the quantity
demanded decreases from 200 to 150 glasses per month. The demand
for Nescafe increases from 50 to 100 glasses per month. (a)
Calculate the price elasticity of demand using the midpoint
formula. [10 marks] (b) If the price of Milo decreases, what will
happen to the total revenue of Milo? Explain. [8 marks] (c)
Calculate the cross elasticity of demand between Milo and Nescafe.
Based on the answer,...

1. When elasticity of demand is equal to one and the change in
the quantity demanded and the change in price are exactly
proportional. This type of elasticity is described as ________.
A. elastic
B. inelastic
C. unitary elastic
2. What happens to total revenue (TR) if the price rises on a
product with demand that is price elastic?
A. Total revenue will rise.
B. Total revenue will remain the same.
C. Total revenue will fall.

Total revenue equals the price multiplied by the quantity. The
relative change price and quantity is given by the concept of
________________.
Select the correct answer below:
profit margin
relative value
elasticity
economies of production
When demand is elastic and price increases, what happens to both
revenue and quantity?
(Select 2 answers.)
Select all that apply:
revenue decreases
revenue increases
quantity decreases
quantity increases
What is the relationship between two goods that are
complements?
Select the correct answer below:
The...

In Market A, a 4 percent increase in price reduces the quantity
demanded by 2 percent. In Market B, a 3 percent increase in price
reduces the quantity demanded by 4 percent. The demand in Market A
and Market B are considered______ and _______, respectively.
a) unit price-elastic; perfectly price-inelastic.
b) price-elastic; price-inelastic.
c) perfectly price-elastic; unit price-elastic.
d) price-inelastic; price-elastic.

Price
Quantity demanded
Quantity produced
Total cost
0.40
500
0
100
0.50
400
100
105
0.60
300
200
120
0.70
200
300
145
0.80
100
400
180
0.90
0
500
225
The above schedule shows the price,
quantity demanded, quantity produced and total cost for a monopoly
firm.
Calculate the marginal revenue, marginal cost and average total
cost schedules.
What are the profit-maximizing output, price and economic
profit?
At the price charged, is the demand elastic or inelastic?...

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