Question

Microeconomics question

1. Price elasticity of supply and price elasticity of demand are likely to be __________ in the __________ than in the __________.

Select one:

a.

higher; short run; long run

b.

lower; long run; short run

c.

higher; long run; short run

d.

lower; past; future

e.

higher; past; future

2. If demand for a product is perfectly inelastic, a tax of $1 per unit imposed on sellers will

Select one:

a.

not affect the market price of the product.

b.

cause the market price to rise by $1 per unit.

c.

cause the market price to decline by $1 per unit.

d.

cause the market price to rise by less than $1 per unit.

e.

none of the above

3.

Exhibit 20-3

Price of Good A	Quantity Demanded of Good A	Quantity Supplied of Good A
$5.50	5	55
$4.50	15	45
$3.50	25	35
$2.50	35	25
$1.50	45	15
$0.50	55	5

Refer to Exhibit 20-3. When price decreases from $4.50 to $3.50, the price elasticity of demand is

Select one:

a.

0.4375.

b.

0.50.

c.

1.0.

d.

2.00.

e.

2.86.

Answer 1

1. C. Mighes; long run i short run 2. b. cause the market price to rise by $2 ber un 3. P,=4.50 Pz= 3.50 , Q=15 , Q2= 25 Elasticity of demand = Qz -Q, Q, +Q2 Pz-P BiH, - 125-15) 25515 3.50 -4.50 2 4.50 +3.50 d. 2.00