Suppose that the percentage change in demand is -10%, the price elasticity of demand is 2, and the price elasticity of supply is 2. The equilibrium price will:
A. decrease by 2.5 percent.
B. increase by 40 percent.
C. increase by 2.5 percent.
D. decrease by 40 percent.
Answer: A
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The heart of the supply-side economic program was to
A. raise taxes. B. lower taxes. C. raise government spending. D. put people to work in government jobs.
The organization that settles trade disputes between countries is the
A) World Bank. B) World Trade Organization. C) International Monetary Fund. D) United Nations.
The budget deficits of the 1980s and early 1990s differ from others in the post-World War II era in that they were
a. a result of the Fed rather than a change in fiscal policy. b. temporary rather than structural, and pose no threat to the economy. c. not contracted to fight a war or end a recession. d. contracted as part of a program to plan the economy.
Assume the market price for tangerines is $18.00 per bushel. At the market price, tangerine growers are willing to supply a quantity of 12,000 bushels per week. The quantity supplied drops to zero when the price falls to $5.00 per bushel. Construct a
graph showing this data, calculate the total producer surplus in the market for tangerines, and show the total producer surplus on the graph. Your supply curve should be a straight line. What will be an ideal response?