Question

25. When calculating price elasticity of supply, you notice that a 2% change in price results in a 4% change in quantity supplied. Calculate the quotient and comment on the price elasticity of supply. (2 or more paragraphs) Chapter 6 26. The inquisitive student in 6th grade has asked you to explain the concept of diminishing marginal utility using normal-sized (1.74 ounces) (Gillette College vending machines) bags of peanut M&Ms. How will you explain this concept to the gifted student making it "super easy" and "super fun" to understand? (2 or more paragraphs) 27. You and 3 of your friends go to Subway tonight for foot-long sub sandwiches. You are willing to pay $7 for your sandwich. Jamie is willing to pay $6.50. Jordan is willing to pay $6. And, Morgan is willing to pay $5.50. Much to all of your amazement, Subway is having "$5 foot-long sub” month! And, each of you is able to purchase your sub sandwich for $5. Explain the consumer surplus graph that begins with you and goes through all 3 friends, and all possible prices. Thus, initial consumer surplus all the way to total consumer surplus. How much is your consumer surplus, how much is Jamie's, how much is Jordan's, and how much is Morgan's. And, how much is the total consumer surplus? Comment on all in 2 or more paragraphs.

Answer 1

| Elasticty of supply = 1 % 41. quantity supply Price Here that Change in price = 21 to Change in quantity = 4% - 2 (Ausweer) Elasticity of supply can we interpreted as the responsiveness of quantity supplied in respect to change in price. here, as the price changed (increased) by 2010 the quantity change (sucreared) This case, the elasticty > 21. This change in the price feilds a greater change in the quantity supplied.

26. utility is the teenofel derived from the consumption of a good (M2M). Marginal utility is the adolitional benefit derived for an additional consumption of the good. I By giving we can the 6th grader MOMS make him understand. The student might enjoy one pack of M&M After consuming that he is given acother pack. There will come a situation when the of the grader will refere to Caft сили мени М9 М's . The moment he chooses not to eat, we can conclude that his margenal utility is zero. Thus, after exency pack the 6th grader consumes, he is less. likely to enjoy. This is the leasic principal of diminishing marginal utility

27. calculate the car Leth first purplus Me = $7.00-$5 = $12 Jamie = $0 $6.50 - $5.00 & $105 Morgan = $5.50- $5.00 = $0.50 The consumer nuplus, is the excess of the marketpi maxinuum price willing le au individual our over the market price. Total consumer seuples = $4.00 - Market puie

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