Question

1. Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms,

   	a.	supply is less elastic at low levels of output and more elastic at high levels of output.
   	b.	market power is substantial.
   	c.	supply is more elastic at low levels of output and less elastic at high levels of output.
   	d.	supply is perfectly inelastic.

1 points   

QUESTION 2

1. Scenario 5-4
   Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.

   Refer to Scenario 5-4. Total consumer spending on milk will

   	a.	increase, and total consumer spending on beef will increase.
   	b.	decrease, and total consumer spending on beef will increase.
   	c.	increase, and total consumer spending on beef will decrease.
   	d.	decrease, and total consumer spending on beef will decrease.

1 points   

QUESTION 3

1. The price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good?

   	a.	The quantity of the good demanded decreases from 200 to 100.
   	b.	The quantity of the good demanded decreases from 250 to 150.
   	c.	The quantity of the good demanded decreases by 0.05 percent.
   	d.	The quantity of the good demanded decreases by 0.2 percent.

1 points   

QUESTION 4

1. Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

   	a.	an increase in the price of the good from $10 to $17.50
   	b.	a 13.33 percent increase in the price of the good
   	c.	an increase in the price of the good from $7.50 to $10
   	d.	a 7.5 increase in the price of the good

Answer 1