A 2 percent increase in the price of jeans leads to a 5 percent decrease in the quantity demanded of jeans. The absolute price elasticity of demand is
A) 2.5.
B) 1.
C) 0.4.
D) 0.2.
Answer: A
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Suppose milk and cereal are compliments and the demand for milk is Qdm = 40 - 6Pm - 2Pc, where Qdm stands for millions of gallons of milk demanded, Pm stands for the price of milk and Pc stands for the price of cereal. The supply of milk is Qsm = 6Pm - 8, where Qsm stands for millions of gallons of milk supplied. The demand and supply of cereal are Qdc = 90 - 5Pc - Pm and Qsc = 5Pc - 10, respectively, where Qdc stands for millions of boxes of cereal demanded and Qsc stands for millions of boxes of cereal supplied. Suppose the government imposes a $2.00 per gallon tax on milk. The new general equilibrium price of milk is:
A. $2.37. B. $4.37. C. $0.37. D. $3.39.
If goods A and B are complements, and if the price of good B rises, how will this affect the market equilibrium for good A?
a. Price will rise and quantity will fall. b. Price will fall and quantity will rise. c. Price and quantity will both rise. d. Price and quantity will both fall.
For US electricity production, what has been historically the greatest source of fuel?
a) coal
b) natural gas
c) nuclear
d) solar
e) wind
Draw in a new supply curve, S1, on figure, showing an increase in supply. What happens to price and quantity?
