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 2P
Suppose chat both wheat and corn have an income elasticity of 0.1. LO20.1
a. If the average income in the economy increases by 2 percent each year, by what percentage does the quantity
b. Given that average personal income doubles in the United States about every 30 years, by about what percentage does the quantity demanded of corn increase every 30 years, holding all other factors constant?
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Suppose that both wheat and corn have an income elasticity of 0.1 a. If the average income in the economy increases by 2 percent each year, by what percentage does the quantity demanded of wheat increase each year, holding all other factors constant? Holding all other factors constant, if 10 billion bushels are demanded this year, by how many bushels will the quantity demanded increase next year if incomes rise by 2 percent? b. Given that average personal income doubles in the United States about every 30 years, by about what percentage does the quantity demanded of corn increase every 30 years, holding all other factors constant?
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.
As consumer incomes have increased in the United States since 1950,
the real price of wheat (the price of wheat adjusted for inflation) has
fallen and the quantity of wheat produced has increased. Which of the
following explains these changes?
O The income elasticity of demand for wheat is greater than +1.0 and the
elasticity of supply of wheat is less than +1.0.
O The income elasticity of demand for wheat is positive but less +1.0 and the
producțivity of wheat farmers has increased.
O Wheat is an inferior good and the productivity of wheat farmers has
decreased.
Government price support programs have decreased the price of wheat and
increased the demand for wheat.
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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- 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 0.5arrow_forward1. Based on Table 1, find the best 1 point answer to describe the table Table 1: Price and Quantity of Good X Price Quantity 4 8 5 10 O Demand Supply Inelastic Supply Unitary Elastic Supplyarrow_forwardRegarding the concept of price-elasticity, which statement is incorrect? O a. A linear demand has constant slope, but variable price-elasticity. O b. In terms of price-elasticity, a linear demand or supply with zero slope is perfectly elastic. O c. Price-elasticities are often lower in the short run than in the long run. O d. If supply is price-inelastic, shifts in demand will have a larger effect on the equilibrium quantity than on the equilibrium price. O e. When demand is price-inelastic, decreases in P offset increases in Q, meaning less revenue (PQ) for producers.arrow_forward
- If a 10% change in price results in a 19.95% change in quantity supplied. then the price elasticity of supply is about O 1.33, and supply is inelastic. O 0.6, and supply is inelastic. O 1.995, and supply is inelastic. O 1.995, and supply is elastic. O 0.6, and supply is elastic. O 1.67, and supply is elastic. O 1.33, and supply is elastic. O 1.67, and supply is inelastic. O 0.75, and supply is elastic. O 0.75, and supply is inelas-tic.arrow_forwardSuppose 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_forwardWHICH OF THE FF. IS FALSE ABOUT Price elasticity of demand D O Dis inelastic when Ichange in quantity demanded| 1 O D is elastic when 1% change in quantity demanded > 1%change in price. O Dis perfectly elastic when |% change in quantity demanded > 0 while 1%change in price.|=0arrow_forward
- Question 2 If the price elasticity of demand is -4.0, a 5 percent decrease in price will increase quantity demanded by 125 percent. O 1.25 percent. 80 percent. 20 percent. O 0.8 percent.arrow_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_forwardAssume 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_forward
- 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 rangearrow_forwardThe coefficient of price-elasticity of supply for a product is 2 if Select one: A. a 2 percent decrease in price causes a 2 percent decrease in quantity supplied. O B. a 1 percent decrease in the price causes a 0.2 percent decrease in quantity supplied. O C. a1 percent decrease in price causes a 2 percent decrease in quantity supplied. D. a 2 percent decrease in price causes a 1 percent decrease in quantity supplied.arrow_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_forward
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