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: C
You might also like to view...
Refer to the following graph. Which of the following statements is true?
a. When output is zero losses equal TFC.
b. At the Break-Even Point marginal revenue equals marginal cost.
c. Any output below the Break-Even Point indicates profits are earned.
d. When Total Revenue equals Total Cost profits are maximized.
Which of the following best describes total fixed cost?
a. Total fixed cost divided by the quantity of output produced. b. Total variable cost divided by the quantity of output produced. c. Total cost divided by the quantity of output produced. d. The change in total cost when one additional unit of output is produced. e. Costs that do not vary as output varies.
During the past quarter of a century, the world's extreme poverty rate (per capita income of less than $1.25 per day) has
What will be an ideal response?
Some policymakers have argued that products like cigarettes, alcohol, and sweetened soda generate negative externalities in consumption. All else equal, if the government decided to impose a tax on soda, the equilibrium quantity of soda would ________
and the equilibrium price of soda would ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease