Case Study

Consider the following equations: Qd = 31 - 3P and Qs = 6 + 2P, where Qd = quantity demanded and Qs = quantity supplied, P = priceDemand SchedulePriceQuantity demanded$2501500$2002100$1502700

Question 1:"As output increases from 2,100 to 2,700 what is marginal revenue?"

Select one:

a.25

b.50

c.(-) $300

d.(-) $ 25

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Question2

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"If price falls from $250 to $200, what is the elasticity of demand over this range?"

Select one:

a.-0.67

b.-1

c.-0.08

d.-1.5

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Question3

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"If price falls from $250 to $200,"

Select one:

a.arrows representing the price and quantity effects both point down

b.an arrow representing the price effect points down and is shorter than an arrow for the quantity effect

c.an arrow representing the price effect points down and is longer than an arrow for the quantity effect

d.arrows representing the price and quantity effects both point up

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"If the own-price elasticity of demand for a good is -0.6 and quantity demanded decreases by 30%, price must have"

Select one:

a.decreased by 0.6%

b.decreased by 18%

c.increased by 20%

d.increased by 50%

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Question5

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If price falls from $200 to $150

Select one:

a.arrows representing the price and quantity effects both point down

b.an arrow representing the price effect points down and is shorter than an arrow for the quantity effect

c.total revenue moves in the same direction as the arrow representing the price effect

d.total revenue moves in the same direction as the arrow representing the quantity effect

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market - clearing price and qunatity using simultaneous equations will be:

Select one:

a."P = 6, Q= 4"

b."P = 5, Q = 16"

c."P = 3, Q = 2"

d."P = 4, Q = 6"

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Question7

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Suppose P = 2. Calculate the ecess. Is it a shortage or surplus.

Select one:

a."15, shortage"

b."6, shortage"

c."6, surplus"

d."15, surplus"

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Suppose P = 7. Calculate the ecess. Is it a shortage or surplus.

Select one:

a."8, shortage"

b."10, shortage"

c."10, Surplus"

d."8, Surplus"

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Which of the following would tend to DECREASE the elasticity of demand for good X?

Select one:

a.The cost of producing X declines

b.New substitutes for X become available from other firms

c.Consumers begin spending a smaller percentage of their income on X

d.both b and c

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Which of the following would tend to INCREASE the elasticity of demand for good X?

Select one:

a.a new discovery allows firms to produce X at a much lower cost.

b.the percentage of a consumer's income spent on good X increases.

c."a new product, Y, which can be used in place of X, is introduced"

d.both b and c