solve problem 1,5,and 6 Section 1: True/False (24 points) etermine whether the f

Question

solve problem 1,5,and 6

Section 1: True/False (24 points) etermine whether the following statements are true or false and justify your answer. If you make a without support, no credit wrill be awarded. Incorrect answers (e.g. mistaking a false assertion as a true one) may receive partial credit provided appropriate work. 4 points each 1. Quantity supplied is always positively related to market price 2. Juan consumes soup and apples for lunch. Apples sell for $1.00 a piece whereas soup is bought at $3.00 per bowl. Assume that Juan spends all of his lunch budget and must consume some amount of both apples and soup. If Juan received 10 utils of satisfaction from his last apple and 5 utils of satisfaction from his last bowl of soup, Juan should buy and consume more bowls of soup to behave optimally 3. Consider the market for slide-rulers which are considered to an be inferior good. Consumer incomes rise at the same time as a new technology is adopted by rmanufacturers, which sig nificantly reduces production costs. Without knowing anything about magnitude of impact of either shock to demand or supply, we can still predict that the equilibrium market price will fall. 4. Olivia views pencils and notebooks as perfect complements in consumption. The price of pencils fall by iore thall 50% while her incorne remains the same. Snice she can aford to purchase more pencils, and by the more-is-better property, Olivia will be better off as a result of her increased purchasing power. 5. Consider a market where demand is perfectly elastic and the elasticity of supply is simply n

Explanation / Answer

1).

So, as we know that 'quantity supply' shows how much a producer want to produce and supply at the ongoing market price. So, here as the market price of a good increases, implied the good become more profitable, => the producer increase the production and quantity supplied. So there are positive relationship between 'market price' and 'quantity supplied'. So, the above statement is 'TRUE'.

5).

Now, here the demand curve is 'perfectly elastic', => the demand curve is horizontal at the given market price. Now, supply curve is upwards sloping. So, under this situation if government impose tax on buyers then the equilibrium price will not change but the equilibrium quantity decreases. So, as the demand curve is perfectly elastic implied the entire tax will goes to seller. So, the above statement is "FALSE".

6).

Now, here the utility function is perfect substitution type. Now if sum of the consumption of two goods is less than or equal to '10' than the utility will be zero. Now, given this preference if we take any three bundles 'A', 'B' and 'C', such that 'A' is preferred to 'B' and 'B' is preferred to 'C', then there must not be any case where 'C' is preferred to 'A', => it does not violate the assumption of 'transitivity'. So, the above statement is 'FALSE'.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.