Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 22, Problem 1P
Suppose that corn currently costs $4 per bushel and that wheat currently costs $3 per bushel. Also assume that the
a. If the price of corn fell by 25 percent to $3 per bushel, by what percentage would the quantity
b. To what value would the price of wheat have to fall to induce consumers to increase their purchases of wheat by 5 percent?
c. If the government imposes a $0.40 per bushel tax on corn so that the price of corn rises by 10 percent to $4.40 per bushel, by what percentage would the quantity demanded of corn decrease? If the initial quantity demanded is 10 billion bushels per year, by how many bushels would the quantity demanded decrease in response to this tax?
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Suppose you observe the price and quantity demanded of a good at two dates. There is a large
percentage change in price but only a small percentage change in quantity. Which is the most likely
price elasticity of demand?
O 1.5
O 1
O 0.5
For product X, the price elasticity of demand has an
absolute value of 3.5. This means that quantity
demanded will increase by
O 1 unit for each $3.50 decrease in price, ceteris paribus.
O 1 percent for each 3.5 percent decrease in price,
ceteris paribus.
O 3.5 units for each $1 decrease in price, ceteris paribus.
O 3.5 percent for each 1 percent decrease in price,
ceteris paribus.
Answer the next question on the basis of the following demand schedule.
Price
$6
5
4
3
2
1
Quantity
Demanded
O
1
O
2
O
3
4
5
The price elasticity of demand is unit-elastic (based on the midpoint formula)
Multiple Choice
6
LO
throughout the entire price range because the slope of the demand curve is constant.
in the $4 to $3 price range only.
over the entire $3 to $1 price range.
over the entire $6 to $4 price range
Chapter 22 Solutions
Microeconomics
Ch. 22 - Prob. 1DQCh. 22 - Prob. 2DQCh. 22 - Prob. 3DQCh. 22 - Prob. 4DQCh. 22 - Prob. 5DQCh. 22 - Prob. 6DQCh. 22 - Prob. 7DQCh. 22 - Prob. 8DQCh. 22 - Prob. 9DQCh. 22 - Prob. 10DQ
Ch. 22 - Prob. 11DQCh. 22 - Prob. 12DQCh. 22 - Prob. 13DQCh. 22 - Prob. 14DQCh. 22 - Prob. 1RQCh. 22 - Prob. 2RQCh. 22 - Prob. 3RQCh. 22 - Prob. 4RQCh. 22 - Prob. 5RQCh. 22 - Suppose that corn currently costs 4 per bushel and...Ch. 22 - Suppose chat both wheat and corn have an income...Ch. 22 - Prob. 3PCh. 22 - Prob. 4P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- QUESTION 4 Apple wish to calculate the price elasticity of demand for iPhones, assuming prices increased from 400BD to 500BD and demand fell from 20,000 units to 18,000 units, what is the elasticity of demand? O 0.47 O2.11 O 1.78 O 6.09arrow_forwardAssume that a decrease of 10 percent in the price of cars results in an increase of 30 percent in quantity demanded, then the price elasticity of demand is 3 O 0.5 O 1 O 0.333arrow_forwardSuppose you are given the following demand data for a product Price $10 9 8 7 LO 6 O O Quantity Demanded The price elasticity of demand (based on the midpoint formula) when price increases from $7 to $9 Is O 30 40 Multiple Choice O 50 60 70 -.6.3. -1.16. -1.60. -227arrow_forward
- Assume that the price of commodity Y rises by 13.5% and the cross price elasticity of demand with commodity X is 1.35. According to this situation, commodity X is O a. not related to commodity Y as the exact price of commodity Y has not been specified b. a complementary product as cross price elasticity of demand is positive O c. a substitute as cross price elasticity of demand is negative d.a substitute as cross price elasticity of demand is positivearrow_forwardLet (inverse) demand be Pb = 113 - 4 Qb and (inverse) supply be Pv = 27. What quantity are sellers willing to sell at price below $ 27 per unit? Answer: your answer Submit Price ($) $120 $100 $80 $60 $40 $ 20 $0 0 LO 5 Demand e Quantity 10 Supply 15 Quantity Eqm 20 25 30arrow_forwardPop's Corn Popcorn shop normally sells 100 bags a day when the price is $6 per bag. On half-price Wednesday, the price is $3 and Pop's sells 150 bags. What is the price elasticity of demand? O 16.67 O 1.667 O 0.6 O 0.5 O 2arrow_forward
- 3. Refer to the expanded table below from review question 8. LO3.4 a. What is the equilibrium price? At what price is there nei- ther a shortage nor a surplus? Fill in the surplus-shortage column and use it to confirm your answers. b. Graph the demand for wheat and the supply of wheat. Be sure to label the axes of your graph correctly. Label equi- librium price Pand equilibrium quantity Q. c. How big is the surplus or shortage at $3.40? At $4.90? How big a surplus or shortage results if the price is 60 cents higher than the equilibrium price? 30 cents lower than the equilibrium price? Thousands of Bushels Surplus (+) or Shortage (-) Thousands Price per Bushel of Bushels Supplied Demanded 85 $3.40 72 80 3.70 73 75 4.00 75 70 4.30 77 65 4.60 79 60 4.90 81arrow_forwardIf an increase in price from $1 to $2 causes a decrease in quantity demanded from 120 to 100, calculate the price elasticity of demand by using the midpoint method. O 1.2 O 1.3 O 0.27 O 0.5arrow_forwardPRICE (Dollars per unit) 360 O 180 W X 15 I I I I I I 48 0 6 54 QUANTITY (Units) For each of the regions, use the midpoint method to identify whether the supply of this good is elastic or inelastic. Region Elastic Inelastic Between W and X Between Y and Z True or False: For high levels of quantity supplied where firms have reached near maximum capacity, supply becomes less elastic because firms may need to invest in additional capital in order to increase production further. True False Z Supplyarrow_forward
- Suppose that the elasticity of supply is 1.60 and the price increases by 5%. We will predict a percent increase in the quantity supplied of: 8% 6% O 3.1% 12%arrow_forwardSuppose that an increase in the price of carrots from $1.20 to $1.40 per pound raises the amount of carrots that carrot farmers produce from 1.2 million pounds to 1.5 million pounds. Using the midpoint method, what is the coefficient of price elasticity of supply? Select one or more: O a. 0.69 O b. 1.20 O c. 1.44 O d. 1.50 e. 1.67arrow_forwardAn elasticity of 1.5 means that a 1% change in price will lead to a % change in quantity demanded. 0.5 O 3.0 1.0 O 15 O 1.5 siven a straight line demand curve, an entrepreneur can lower the price of a product to increase evenues until O price elasticity goes negative O price elasticity is elastic price elasticity is greater than 1 O price elasticity is unit elastic Statement I: A perfectly inelastic demand curve and a perfectly elastic supply curve are represented the same way on a graph. Statement Il: A perfectly elastic demand curve and a perfectly elastic supply curve are represented the şame way on a graph. O Statement II is true and statement I is false. O Both statements are false. O Both statements are true. O Statement I is true and statement II is false.arrow_forward
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