N6

1.The market for cranberries is perfectly competitive. At the current market price, the own-price price elasticity of demand for cranberries is inelastic and market supply is elastic. Poor weather has reduced the yield of cranberries. When this happens, the market quantity of cranberries ______and the revenue for cranberry farmers ______.

A. increases; increases.

B. decreases; increases.

C. increases; decreases.

D. decreases; decreases.

E. decreases; does not change.

2.The market for wheat is perfectly competitive, without externalities. Market Supply is given by Q = 2P 4 and Market Demand is given by Q = 44 4P. What is Total Market Surplus?