3. If demand is perfectly elastic, consumer surplus is negative. TRUE OR FALSE. Please explain. 4....
3. If demand is perfectly elastic, consumer surplus is negative. TRUE OR FALSE. Please explain.
4. If demand is perfectly inelastic, what is the value of consumer surplus? Explain.
Homework Answers
a) False, if the demand is perfectly elastic then the consumer surplus will be zero, because the consumer surplus is the area between the price line and demand curve, here demand curve and price line are same.
b) Here the consumer surplus is infinity as the person consuming the good would have brought that at a very high price too. So the difference between the expected price and actual price is the consumer surplus.
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3. If demand is perfectly elastic, consumer surplus is negative.
TRUE OR FALSE. Please explain.
4....
4. Consider a perfectly elastic supply curve, at p = 10, along with a perfectly inelastic...
4. Consider a perfectly elastic supply curve, at p = 10, along with a perfectly inelastic demand curve, at q = 103. Calculate the Consumer Surplus and the Producer Surplus in this market. Show your work. (10%)
3. When is demand perfectly inelastic? When is demand perfectly elastic? Explain the difference between these...
3. When is demand perfectly inelastic? When is demand perfectly elastic? Explain the difference between these two terms. Provide examples.
true or false 6 If demand is perfectly elastic, the demand curve is horizontal, and the...
true or false
6 If demand is perfectly elastic, the demand curve is horizontal, and the price elasticity of demand equals 1 (3.05 ) ох
The perfectly competitive firm's demand curve is: Perfectly elastic. Relatively elastic Perfectly inelastic. Relatively inelastic Statement...
The perfectly competitive firm's demand curve is: Perfectly elastic. Relatively elastic Perfectly inelastic. Relatively inelastic Statement 1: In the long run, firms in a monopolistically competitive industry will be producing that quantity that maximize social surplus. Statement 2: In the long run, firms in a monopolistically competitive industry will be producing at the minimum of its ATC curve. Statement (1) is true; statement (2) is false. Statements (1) and (2) are both true. Statement (1) is false; statement (2) is...
All else equal, consumer demand for a good will be more elastic in the short run...
All else equal, consumer demand for a good will be more elastic in the short run than in the long run. True False D Question 4 10 pts Food and drink purchased inside an airport or concert have higher prices than food and drink elsewhere because when consumers are in these locations demand is more (elastic, inelastic). When this is the case. sellers can earn more revenue by charging (higher, lower) prices. The reason that prices in these locations aren't...
Suppose that the demand for apples is perfectly elastic and the government levies a tax on...
Suppose that the demand for apples is perfectly elastic and the government levies a tax on the producers of apples. Assume that the supply of apples is neither perfectly elastic nor perfectly inelastic. 1. How will the price paid by consumers change? Is this change bigger or smaller than the price change that would result if the demand for apples were not perfectly elastic? 2. How will the quantity of apples consumed change because of the tax? Is this change...
3. Consider a perfectly inelastic supply curve at q = 1,013, and a perfectly elastic demand...
3. Consider a perfectly inelastic supply curve at q = 1,013, and a perfectly elastic demand curve at p = 101. A subsidy of $5 per unit is given to producers. Using a diagram, explain how the subsidy is shared between consumers and producers. What is the Deadweight Loss? (30%)
1)Explain what it means when demand is inelastic? 2) If demand is elastic, total revenue will...
1)Explain what it means when demand is inelastic? 2) If demand is elastic, total revenue will increase when the price decreases? True or False? 3) The price elasticity of supply will be a smaller number when it is relatively easy for sellers to increase their supply. ( True or False)? 4) Demand is more elastic when the absolute value of the price elasticity of demand is larger. ( True or False)? 5) If the quantity demanded of one good increases...
An individual price-taking firm faces a vertical, perfectly elastic demand curve for its output True False
An individual price-taking firm faces a vertical, perfectly elastic demand curve for its output True False
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Given the demand curve of P=60-3Q and a long-run supply curve is perfectly elastic at $4 per unit, what is the output level produced by the competitive industry and what would consumer surplus be? Use a diagram to illustrate your answer.
3. When is demand perfectly inelastic? When is demand perfectly elastic? Explain the difference between these two terms. Provide examples.
true or false
6 If demand is perfectly elastic, the demand curve is horizontal, and the price elasticity of demand equals 1 (3.05 ) ох
The perfectly competitive firm's demand curve is: Perfectly elastic. Relatively elastic Perfectly inelastic. Relatively inelastic Statement 1: In the long run, firms in a monopolistically competitive industry will be producing that quantity that maximize social surplus. Statement 2: In the long run, firms in a monopolistically competitive industry will be producing at the minimum of its ATC curve. Statement (1) is true; statement (2) is false. Statements (1) and (2) are both true. Statement (1) is false; statement (2) is...
All else equal, consumer demand for a good will be more elastic in the short run than in the long run. True False D Question 4 10 pts Food and drink purchased inside an airport or concert have higher prices than food and drink elsewhere because when consumers are in these locations demand is more (elastic, inelastic). When this is the case. sellers can earn more revenue by charging (higher, lower) prices. The reason that prices in these locations aren't...
3. Consider a perfectly inelastic supply curve at q = 1,013, and a perfectly elastic demand curve at p = 101. A subsidy of $5 per unit is given to producers. Using a diagram, explain how the subsidy is shared between consumers and producers. What is the Deadweight Loss? (30%)
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