As price elasticity of demand increases, the burden of a tax
gets _______; as price elasticity of supply increases, the
burden of a tax gets _________.(Here, you can read "bigger" as "heavier" and "smaller" as
"lighter" if that helps.)A. smaller; biggerB. bigger; smallerC. smaller; smallerD. bigger; bigger
Question: Equilibrium price must decrease if:
a. demand increases and supply increases
b. demand increases and supply decreases
c. demand decreases and supply decreases
d. demand decreases and supply increases
The price elasticity of demand for cat
food is -0.4 and the price increases by 6%.
a. How
much will sales of cat food change? Show your work.
b. What
will happen to consumer expenditures on Purina cat
food? Explain.
Suppose income elasticity of demand is equal to 2.0
a. If income increases by 10%, Quantity Demanded will ____ by
___%
b. The demand is income ____ because the coefficient is
_____1.
c. Since the income elasticity is ____, buyers view this good as
a(n) ____ good.
d. As income increases, demand for this good will ___; as income
increases, the demand curve will shift to the ____.
Evaluate the following statements:
“Moral hazard behavior decreases when the price elasticity of
demand increases.”
“Managed care creates incentives that improve the
principal-agent relationship.”
“Adverse selection and favorable/preferred selection make
health insurance more affordable.”
4. Elastic, inelastic, and unit-elastic demand The following graph shows the demand for a goodFor each of the regions listed in the following table, use the midpoint method to identify if the demand for this good is elastic, (approximately) unit elastic, or inelastic. True or False: The value of the price elasticity of demand is equal to the slope of the demand curve.
Elastic, inelastic, and unit-elastic demand The following graph shows the demand for a good. For each of the regions, use the midpoint method to identify whether the demand for this good is elastic, (approximately) unit elastic, or inelastic. Region Elastic Inelastic Unit Elastic Between X and Y Between W and X Between V and Z True or False: The value of the price elasticity of demand is not equal to the slope of the demand curve. True False
Demand is inelastic if the price elasticity of demand is
numerically (absolute value terms)
Equal to 1
Equal to 0
Less than 1
all of the above
none of the above
In the long run a company that produces and sells laundry
detergent increases all of its inputs by 25% and its output rises
from 1,250 units to 2,000 units. For this range of output, the
laundry detergent company exhibits
increasing returns to scale.
constant returns to scale.
decreasing returns...