Suppose that the supply and demand for widgets is given by the following equations: QD = 36 – 3P = -12 + 5P What is the price elasticity of supply O a. -1 b. 5 C. 1/3 d. 5/3 QUESTION 2 Suppose that the supply and demand for widgets is given by the following equations: QD = 36 – 3P Qs = -12 + 5P If a tax were imposed on widgets, which of the following would be correct. a. The tax would be split between consumers and producers, but consumers would pay the majority of the tax b. The entire tax would be paid by producers c. The tax would be split between consumers and producers, but producers would pay the majority of the tax d. The entire tax would be paid by consumers

The table below shows the demand schedule for museum admissions in a small city. Price (per visit per person) Between the prices of $9 and $10, the elasticity of demand is O A. 0.68. B. 0.88. C. 1.46. D. 1.13. E. 0. $10 $9 $8 $7 $6 Quantity Demanded (thousands of person-visits per year) 6 7 8 9 10

1. Optimal choice of capital Eleanor makes sweaters in her home. Starting with just some knitting needles and yarn, she was able to knit 60 sweaters per year. Now some local stores have expressed interest in her designs and offered to buy her sweaters for $10 each. This makes it worthwhile for her to invest in some capital; in particular, she could produce many more sweaters if she invested in one or more looms, as shown in the following table. Assume that Eleanor's sweater business is a perfectly competitive firm. Complete the following table by calculating the marginal physical product (MPP) of each loom and the marginal revenue product (MRP) of each loom. Quantity of Input (Looms) Output (Sweaters per year) MPP of Each Loom (Sweaters) MRP of Each Loom (Dollars) 0 1 2 3 4 5 60 110 150 184 213 238 50 40 34 29 25 If the rental price of a loom is $270 per year, Eleanor should use 500 400 340 290 250 Suppose the demand for sweaters is very elastic, while the demand for cigarettes is very…

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expectto have more price elastic demand?