Question

Sarah and David both have linear demand curves for lemonade. Sarah's demand curve for lemonade intersects...

Sarah and David both have linear demand curves for lemonade. Sarah's demand curve for lemonade intersects David's demand curve at a price of 50 cents per glass. Sarah's demand curve is more inelastic than David's. A change in the price of lemonade from 50 cents to 25 cents per glass will

A. increase David's consumer surplus more than Sarah's.

B. increase Sarah's consumer surplus more than David's.

C. decrease Sarah's consumer surplus more than David's.

D. decrease David's consumer surplus more than Sarah's.

i know the answer is A, but why?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans) the correct option is A. increase David's consumer surplus more than Sarah's.

Because Davids’ demand is less inelastic than Sarah meaning a small percentage decrease in price will lead to a larger percenatage increase in quantity demanded. When price decreases to 25 cents David’s quantity demanded for lemonade increases which means his consumer suplus increases. Sarah demand is more inelastic so the decrease in price will not lead to a larger percentage increase in quantity so her consumer surplus does not increase much

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. If we are on the elastic portion of linear demand curve a decrease in price...
1. If we are on the elastic portion of linear demand curve a decrease in price ...... total revenue a. Decrease b. Increase c. Does not change d. any of the above 2. The Dubai Chamber estimated, in 2011, that the cross price elasticity of Brazilian beef with respect to the US beef is 33.This result means A. A 10% increase in the price of US beef imports will result in a 33% increase in the quantity of beef imports...
1. Given 2 demand curves: Demand curve A is flatter than Demand curve B. Both curves...
1. Given 2 demand curves: Demand curve A is flatter than Demand curve B. Both curves intersect the same point of price =$12 and Quantity = 2,000. Price increases to $15. Which demand curve will either have higher revenue or lower loss? Demand curve A Demand curve B both will experience the same amount of revenue loss both will experience the same amount of revenue gain 2. Assume a doctor earned $200,000 last year. If research showed that doctor's skills,...
A. Draw a typical demand curve for gasoline in Charlotte. Label the axis and the demand...
A. Draw a typical demand curve for gasoline in Charlotte. Label the axis and the demand curve. Assume that the current price is $2.65 per gallon. Shade in the consumer surplus in the market. B. What does consumer surplus measure? What are the units for consumer surplus? C. On the same graph as A above, show an increase in price to $2.95. Mark the change in consumer surplus. Is this a loss or a gain in consumer surplus?
1-As we move up the demand curve, the price elasticity of demand * A) increases B)...
1-As we move up the demand curve, the price elasticity of demand * A) increases B) decreases C) becomes unitary D) does not change 2-If the price of lemonade increases relative to the price of grape juice, the demand for: * A) grape juice will decrease. B) grape juice will increase. C) lemonade will decrease. D) lemonade will increase. 3-An increase in price will result in no change in total revenue if: * A) the percentage change in price is...
Suppose there is a linear downward-sloping demand curve and a linear upward-sloping supply curve for a...
Suppose there is a linear downward-sloping demand curve and a linear upward-sloping supply curve for a good. Government regulations increase the cost of producing gasoline while at the same time government regulations reduce the cost of driving a relatively inefficient sport utility vehicle (SUV). Graph the original demand and supply curves to explain how the equilibrium price will change?
1. Suppose two linear demand curves D1 and D2 have the same vertical intercept and D1...
1. Suppose two linear demand curves D1 and D2 have the same vertical intercept and D1 is steeper than D2: i. At any given P, which demand is more elastic? ii. At any given Q, which demand is more elastic? 2 Suppose two linear demand curves D1 and D2 are parallel to each other and D1 is higher than D2: i. At any given P, which demand is more elastic? ii. At any given Q, which demand is more elastic?...
) Use the following information for the market for bananas. Supply and demand curves are linear...
) Use the following information for the market for bananas. Supply and demand curves are linear Supply is steeper than supply Demand intersects the price axis at 36 Supply intersects the price axis at 6 The equilibrium price is 24 and the equilibrium quantity is 6 a) Draw a supply and demand model of the market for bananas. Be sure to show the equilibrium quantity and price. b) Calculate the market’s CS, PS, and TS. c) Assume a binding price...
The demand curve for peanuts is downward-sloping. At a price of $2 / pound, the quantity...
The demand curve for peanuts is downward-sloping. At a price of $2 / pound, the quantity demanded of peanuts is 100 pounds. If the price of peanuts rises to $4 / pound, consumer surplus will: a. Decrease by exactly $200. b. Decrease by less than $200. c.Decrease by exactly $100. d. Decrease by more than $200.
In each of the following cases, indicate whether a change in the demand or supply curve...
In each of the following cases, indicate whether a change in the demand or supply curve (or neither) is taking place for lettuce and for tomatoes. Assume all the markets described are competitive and in equilibrium both before and after the change: a. The cost of producing lettuce falls, as does the price. Consumers purchase more lettuce. b. In August, the price of tomatoes fell by 15 cents per pound and consumers purchased more lettuce. c. The price of tomatoes...
The demand curve for peanuts is downward-sloping.  At a price of $2 / pound, the quantity demanded...
The demand curve for peanuts is downward-sloping.  At a price of $2 / pound, the quantity demanded of peanuts is 100 pounds.  If the price of peanuts rises to $4 / pound, consumer surplus will: Group of answer choices Decrease by exactly $200. Decrease by less than $200. Decrease by exactly $100. Decrease by more than $200.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT