Price (per bowl of soup) Quantity of Soup demanded bowls per month 20 40 10 30 P
ID: 1116864 • Letter: P
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Price (per bowl of soup) Quantity of Soup demanded bowls per month 20 40 10 30 Price er salad Question 17: Imagine that you are a research assistant for your favorite economics professor. Your professor gives you the table above. It shows how many bowls of soup were purchased last month at her husband's restaurant. At different times, her husband charged different prices for salads at his restaurant. Your professor claims that the table has enough information to plot two distinct demand curves for soup. According to these data, soup and salad are 1 complement goods 2) substitute goods 3) delicious goods 4) unrelated goods Question 26: Suppose the price elasticity of demand for computers is -2.5 and that the market is currently in equilibrium. If the price of computers is increased by 1%, the quantity of computers demanded will: 1) 2) 3) rise by 25% fall by 25% rise by 2.5% C 4) none of the above Question 25: If the demand for labor is inelastic, then a given increase in wages will generaterelative to demand for labor that is elastic. 1) a larger decrease in the quantity of labor demanded 2) a smaller decrease in the quantity of labor demanded 3) the same size decrease in the quantity of labor demanded 4 a larger increase in the quantity of labor demanded Total Product of labor TPL (pounds of documents shredded/hour) 12 23 Labor input (workers/hour) 1 4 50 57 63 6 Question 61: The table above shows the production function for Saul Goodman, a lawyer who needs to hire workers to help him shred his clients' sensitive documents. Suppose that labor is Saul's only input, so that wages make up Saul's only cost. If the equilibrium price of shredding documents is $2 per pound and the wage paid to each worker is $15 per hour of the third worker hired per hour is. C 1) S33 2) $66 3) $20 C 4) S5Explanation / Answer
17. The right answer is option 2) Substitute Goods.
Explanation: We can see in the data that when the price of a salad is increased keeping the price of soup constant, the demand for soup increases. So, when the price of salad increased from 1 to 2 and the price of soup is fixed at 1, the demand for soup increases from 20 to 40. Similarly, when the price of salad increased from 1 to 2 and the price of soup is fixed at 2, the demand for soup increases from 10 to 30. This happens in case of substitute goods, in which an increase in the price of one good results in an increase in the demand for the other good.
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