1) When demand is elastic -a price increase lowers total revenue. -the percentag
ID: 2440673 • Letter: 1
Question
1) When demand is elastic
-a price increase lowers total revenue.
-the percentage change in quantity demanded is greater than the percentage change in price.
-buyers are sensitive to price changes.
-All of the statements are true.
2) If Mrs. T.F. Baker buys 29 pairs of false eye lashes at the local drug store,
-she is definitely not enjoying a consumer surplus.
-she may or may not be enjoying a consumer surplus.
-she is definitely enjoying a consumer surplus.
3)
-decrease in supply.
-change in quantity supplied.
-change in supply.
-increase in supply.
4)
-$250.
-$400.
-$225.
-$200.
5) A change in the demand for automobiles may be caused by a _______________.
-All of these choices
-change in tastes and preferences
-change in income
-change in the price of gasoline
6) Suppose that, due to low profits, many individuals decide to leave the farming business. The effect of the exodus will be
-to decrease the prices of agricultural products.
-to increase the prices of agricultural products.
-to decrease the demand for agricultural products.
-to increase the demand for agricultural products.
7) If the income elasticity for Ramen Noodles is -3.0, we may conclude that Ramen Noodles are __________.
-both a normal good and an inferior good
-a inferior good
-a normal good
-neither a normal good nor an inferior good
8)
-M.
-K.
-L.
-J
9) Goods for which demand increases as income decreases are called
-substitute goods.
-complementary goods.
-inferior goods.
-normal goods.
10) When the average total cost is at its minimum, it is
-greater than MC.
-equal to MC.
Explanation / Answer
Answer:
1) A percentage change in quantity demanded is greater than a percentage change in price.
Explanation : a demand is said to be elastic when the changes in prices has a big impact on the quantity Purchased of a commodity. When price is elastic a percentage change in price will lead an increased change in quantity purchased.
2) She is definitely enjoying a consumer surplus.
Explanation: Consumer surplus is defined as difference between the amount that the consumer is will to pay for a commodity and the actual price that he pays. Thus the consumer will be willing to consume that commodity until the price reaches the price that he is will to pay. In our case baker is buying 29 pairs of eye lashes because the price she pays for it is lesser than the price she is willing to pay.
3)Change in Quantity supplied.
Explanation: In the diagram the supply has changed from point I to J. Both the points are on the same supply curve. Movement along the same supply curve as a result of change in price is known as expansion in supply,as a result of which quantity supplied increases.
4) $250
Fixed Cost =200
When output=4 , variable cost=800
Total Cost=Fixed Cost+Variable Cost
=800+200=1000
Average variable cost = TC/q
=1000/4=250
5) all of these choices.
Explanation: Demand for a particular commodity can be influenced by factors like taste of the consumer,income of the consumer ( an increase in income will make automobile more affordable for the consumer), changes in prices of gasoline ( when price of the gasoline decreases more people will be willing to buy automobile because they can travel more and vice versa).
6) increase the prices of agricultural products.
Explanation: when a lot of people leave agriculture business this will lead to a decrease in the production of agricultural products . Supply will become lesser and will ultimately result in increasing the prices of agricultural products.
7) inferior good.
Explanation: inferior goods are goods whose demand decreases with an increase in income, Elasticity of demand for such goods will be negative in nature. Percentage change in Quantity Demanded decreases with respect to percentage increase in income.
8)J
Explanation: Fixed Cost are costs that does not change in response to a change in the quantity produced or volume of business. As a result of which the curve is downward slopping in nature. Fixed cost, J, is simply the vertical distance between Average Total Cost ,L, and Average Variable Cost, K.
9) Inferior goods.
Explanation: Inferior good are those goods whose demand decreases as a result of an increase in income and vice versa.
10)equal to MC.
Explanation: MC cuts ATC when atc is at the minimum. Therefore ATC=MC at the point where ATC is minimum.
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