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    Elasticities and Price of Demand and Supply

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    1. If a 1% fall in the price of a product cause the quantity demanded of the product to increase by 2%, demand is
    (a) inelastic
    (C) unit elastic
    (D) perfectly elastic

    2.The minimum acceptable price for a product that Juan is willing to receive is $20. It is $15 for Carlos. The actual price they receive is $25. What is the amount of the producer surplus for Juan Carlos combined?
    10, 15, 20 or 25 dollars.

    3. Compared to the lower-right portion, the upper-left portion of most demand curves tends to be
    (a) more inelastic
    (b) more elastic
    (c)unit elastic
    (d) perfectly inelastic

    4. Katie is willing to pay $50 for a product and Tom is willing to pay $40. The actual price that they have to pay is $30. What is the amount the consumer surplus for Katie and Tom combined. $30, $40, $50 or $60

    5. If when the price of a product rises for m$1.50 to $2, the quantity demanded of the product decreases from 1000 to 900, the price elasticity of demand coefficient, using the midpoint formula is

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    Solution Preview

    Please refer attached file for complete solution. Expressions typed with the help of equation writer are missing here.


    Change in prices=-1% (negative sign indicates fall)
    Change in quantity demanded=2%
    Price elasticity of demand=Change in quantity demanded/change in prices=2%/(-1%)=-2
    Absolute value of price ...

    Solution Summary

    There are 5 short answer type problems. Solution to each problem depicts the step by step methodology to reach the final answer.