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- Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.
- After analyzing the demand for his products, Ahmed realized that the demand for his products is inelastic. This means that, O a. the demand for his products are sensitive to price changes O b. it is not advisable to increase his price O c. the demand for his products are weak O d. it is fine to increase his pricesuppose a professional basketball game is to be played at a suburban arena, which increases demand for parking on the night of the game. If the suburban area has the ability to create additional parking during periods of peak demand, then O A the supply of parking will be more elastic and the price of parking wil increase by a relatively large amount the night of the game. O B the supply of parking wil be more elastic and the price of parking wil increase by arelatively small amount the night of the game the supply of parking wil be more inelastic and the price of parking will not change the night of the game o D, the supply of parking wil be more inelastic and the price of parking will increase by a small amount the night of the game. relatively o E. the supply of Paking will be perfectly elastic and the price of parking will increase by a relatively large amount the night of the game.The following graph shows the demand for a good. PRICE (Dollars per unit) 280 180 140 40- 0 12 Region Between X and Y Between W and X Between Y and Z Z O True O False 42 54 QUANTITY (Units) For 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. 84 W O O Demand Elastic Inelastic Unit Elastic O O O O O O O (?) True or False: The slope of the demand curve is not equal to the value of the price elasticity of demand.
- While analyzing the semiconductor industry you notice that when the price of ultrapure water rises 2%, the demand for chip grade silicon declines 8%. From this data what appears to be true? O A Chip grade silicon is a substitute to Ultrapure water with a cross-price elasticity of +4. O B. Chip grade silicon is a complement to Ultrapure water with a cross-price elasticity of +0.25 O C. Chip grade silicon is a complement to Ultrapure water with a cross-price elasticity of-4. O D. Chip grade silicon is a substitute to Ultrapure water with a cross-price elasticity of -0.25|Unit 3 Midterm Economics A docs.google.com/forms/d/e/1FAlpQLSfDzcagnpq9EUKBs3AWMb. a change in quantity demanded for one product or service causes a change in simple demand for a related product or service. * In 2. O Elasticity of Demand O Cross Elasticity of Demand O Diminishing Marginal Utility O Cost-Benefit Analysis O All of These O None of These The rules of the price system operate in all markets of a capitalist/market economy. The market where consumers earn income Market. by selling resources to business resources is called O ConsumerWhat is the sum of all individual demand curves for a product? Select one: summation demand cross out O b. market demand cross out Oc consumption demand cross out O d. total demand cross out
- Using the supply and demand equations given below: Demand Qd = 25 – 2PSupply Qs = 1 + P If the price falls from $8 to $7:a. Compute for the own price arc elasticity of demand. Provide an economic interpretationof your computed value (this is different from what is asked next) and classify the good according tothe type of elasticity. b. Compute for the price elasticity of supply. Provide an economic interpretation of yourcomputed value and classify the good according to the type of elasticity. 1. What is the relationship between total revenue and own-price elasticity of demand? 2. Illustrate a situation when the producer of a good will have a greater tax incidence than a consumer.What does elasticity have to do with tax incidence?The shorter the period of time consumers have to adjust to price changes, the O lower; income O lower price O higher; income higher; price the elasticity of demand.A 10 percent increase in income leads to a 15% decrease in the quantity of Cheetos demanded but no change in the price of Cheetos. From this information, we can assume: O Cheetos are an inferior good and price elasticity of demand is less than 1. O Cheetos are a normal good and price elasticity of demand is greater than 1. Cheetos are an inferior good and price elasticity of supply is equal to zero. Cheetos are an inferior good and price elasticity of supply is infinite.
