As we move down the demand curve (lowering price), price elasticity of demand: i

Question

As we move down the demand curve (lowering price), price elasticity of demand:

is constant

For the points shown on the graph, comparing price elasticity of demand we see that:

For the points shown on the graph, price elasticity of demand for Rolla Cola is:

2/3

For the points shown on the graph, price elasticity of demand for Citrus Attack is:

I like this old school graph... look at it carefully. A $30 per unit production subsidy would cost how much to taxpayers?

I like this old school graph... look at it carefully. A $30 per unit production tax would generate how much tax revenue?

$18,000

I like this old school graph... look at it carefully. A $30 per unit subsidy given to the producer would result in what new market price for consumers?

$40

I like this old school graph... look at it carefully. A $30 per unit tax on the producers would result in what new market price for consumers?

$50

I like this old school graph... look at it carefully. How much consumer surplus is shown?

$24,000

I like this old school graph... look at it carefully. How much producer surplus is shown?

$18,000

I like this old school graph... look at it carefully. What is the lowest level of per unit tax on producers that would result in the "disappearance" of this market (meaning that the price is so high that quantity demanded is driven to 0)?

Using the midpoint formula, the price elasticity of demand between points A and B is:

2/5

Using the midpoint formula, the price elasticity of demand between points B and C is:

none of these answers is correct

It is a hot day at the beach. Ice water costs $1 per bottle and this is your only option. Your marginal benefit for water follows the equation MB = $10 - $x.

x is represents the number of bottles of ice water you have had. So, for example, the marginal benefit of the first bottle is $10 - $1 = $9. The MB of the 2nd bottle is $8 .. and so on.

Assuming you are an economically rational consumer how much consumer surplus will you achieve when you are done for the day?

81

It is a hot day at the beach. Ice water costs $1 per bottle and this is your only option. Your marginal benefit for water follows the equation MB = $10 - $x.

x is represents the number of bottles of ice water you have had. So, for example, the marginal benefit of the first bottle is $10 - $1 = $9. The MB of the 2nd bottle is $8 .. and so on.

Assuming you are an economically rational consumer how much consumer surplus will you achieve on the first bottle of water?

$80

A. becomes more inelastic B. none of these answers is correct C. becomes more elastic D.

is constant

For the points shown on the graph, comparing price elasticity of demand we see that:

A. Demand for Citrus Attack is elastic while demand for Rolla Cola is inelastic B. Demand for both goods is inelastic C. Demand for Citrus Attack is inelastic while demand for Rolla Cola is elastic D. Demand for both goods is elastic

Explanation / Answer

1.

As we move down the demand curve (lowering price), price elasticity of demand becomes more inelastic. That is demand becomes more inelastic.

2.

P Q % Change in P(A) % Change in Q(B) Ed=(B)/(A) 18.0 100.0 12.0 300.0 -33.3 200.0 -6.0 6.0 500.0 -50.0 66.7 -1.3

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