Suppose an increase in supply lowers the price from $10 to $8 and increases the quantity demanded from 100 units to 130 units. Using the midpoint method, the elasticity of demand equals
A) 1.17.
B) 0.85.
C) 0.26.
D) 1.56.
E) None of the above answers is correct.
A
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Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?
a. Price will increase; quantity is ambiguous b. Price will increase; quantity will increase c. Price will increase; quantity will decrease d. Price will decrease; quantity is ambiguous e. The impact on both sides is ambiguous
Evidence indicates that tariffs and quotas are
A) beneficial for producers in a protected industry, but not beneficial for the workers in the industry. B) beneficial for producers in a protected industry, but not beneficial for consumers. C) beneficial for workers in a protected industry, but not beneficial for consumers. D) not beneficial for the workers in a protected industry or for consumers. E) b and c
Figure 4-6
Grapes can be used for wine or for raisins. Which graph in Figure 4-6 best depicts the effects on the U.S. raisin market of a decrease in purchases of domestic wines?
a.
1
b.
2
c.
3
d.
4
If the market price rises from P0 to P2 in the above figure, then there is a
A. surplus equal to the distance Q0, Q2. B. shortage equal to the distance Q0, Q2. C. shortage equal to the distance Q1, Q2. D. surplus equal to the distance Q1, Q2.