Eco 561 Week 6 Quiz Free Essay Example
ECO 561 Week 6 Quiz
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** Important ** … ECO 561 Week 6 “FREE” Quiz w/ answers I would greatly appreciate comments ..SO PLEASE COMMENT (add notes here) at this site or .. go to ROGUEPHOENIX.39 at Facebook , and LET ME KNOW THAT THIS IS HELPING you .
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Good luck ….
1. If the demand curve is QD = 100 – 10P and there is a $1 price increase, then the elasticity of demand at P = 2 is
Hint : Calculate the quantity demanded at P = 2 and P = 3, and then apply the elasticity formula. A. -0.25 B. -0.5 C. -0.75 D. -1
At P = 2, Q = 100 – 20 = 80. At P = 3, Q = 100 – 30 = 70. So change in Q is 70 – 80 = –10, and change in P is 3 – 2 = 1. Therefore, the elasticity is (–10/1) * (2/80) = –1/4 = –0.25.
2. If the absolute value of a demand elasticity is less than 1, then
Hint : A price increase under elastic demand will cause a decline in total revenue while a price increase under unitary elasticity will cause the total revenue to remain unchanged. A price increase under inelastic demand will lead to an increase in total revenue. A. the demand is inelastic, and a price rise will reduce the total revenue B. the demand is inelastic, and a price rise will increase the total revenue C. the demand is elastic, and a price rise will reduce the total revenue D. the demand is elastic, and a price rise will increase the total revenue
By definition, the demand is inelastic. Also, when demand is inelastic, the price should be increased, as the rise in price will dominate the fall in quantity, and the total revenue will increase.
3. If the cross-price elasticity is negative, then the two goods are
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Hint : If the cross-price elasticity is negative, then the quantity demanded for the other good increases.
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A. unrelated
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** Important ** … ECO 561 Week 6 “FREE” Quiz w/ answers I would greatly appreciate comments ..SO PLEASE COMMENT (add notes here) at this site or .. go to ROGUEPHOENIX.39 at Facebook , and LET ME KNOW THAT THIS IS HELPING you .
-------------------------------------------------
Good luck ….
1. If the demand curve is QD = 100 – 10P and there is a $1 price increase, then the elasticity of demand at P = 2 is
Hint : Calculate the quantity demanded at P = 2 and P = 3, and then apply the elasticity formula. A. -0.25 B. -0.5 C. -0.75 D. -1
At P = 2, Q = 100 – 20 = 80. At P = 3, Q = 100 – 30 = 70. So change in Q is 70 – 80 = –10, and change in P is 3 – 2 = 1. Therefore, the elasticity is (–10/1) * (2/80) = –1/4 = –0.25.
2. If the absolute value of a demand elasticity is less than 1, then
Hint : A price increase under elastic demand will cause a decline in total revenue while a price increase under unitary elasticity will cause the total revenue to remain unchanged. A price increase under inelastic demand will lead to an increase in total revenue. A. the demand is inelastic, and a price rise will reduce the total revenue B. the demand is inelastic, and a price rise will increase the total revenue C. the demand is elastic, and a price rise will reduce the total revenue D. the demand is elastic, and a price rise will increase the total revenue
By definition, the demand is inelastic. Also, when demand is inelastic, the price should be increased, as the rise in price will dominate the fall in quantity, and the total revenue will increase.
3. If the cross-price elasticity is negative, then the two goods are
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Hint : If the cross-price elasticity is negative, then the quantity demanded for the other good increases.
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A. unrelated