Microeconomics I Homework#1 Answer Key Fall 2009 I. Multiple choice question 1 2 3 4 5 6 7 8 9 10 D C C A A D D B A C 11 12 13 14 15 C C A B C 1) Who or what is responsible for the allocation of scarce resources into the production of most goods in the U.S.? A) the American government B) the UN C) the Federal Reserve Bank D) markets and prices Answer: B 2) Which of the following is an example of a normative statement?
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change in price for the good or product. 3. Determine if the demand for the following products is price elastic or price inelastic‚ and explain your answer. In your explanation‚ be sure to include how the necessity of a good and the availability of substitutes affect the price elasticity of demand in each of these specific cases: • Gasoline as a commodity This is inelastic because gasoline cannot be substituted with anything. • Gasoline sold at a local gasoline station Elastic because there
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A. Discuss elasticity of demand as it pertains to elastic‚ unit‚ and inelastic demand. Elasticity of demand is gauged by the percentage of change in demand when the price of an item varies. If the change in the quantity demanded is greater than 1 the demand is elastic. Elasticity of demand is calculated by ED=quantity demanded/decrease in price. If you reduce the price of milk by 6%‚ and that causes an increase of quantity demanded by 9% the demand for milk is elastic (ED= .09/.06 = 1.5).
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Knowledge Check Week 6 The material presented below is not meant to be a comprehensive list of all you need to know in the content area. Rather it is a starting point for building your knowledge and skills. Additional study materials are recommended in each area below to help you master the material. Personalized Study Guide Results: Score: 5 / 6 Concepts | Mastery | Questions | Elasticity | 67% | * 1 * 2 * 3 | Relationship of Pricing Strategy to Market Structure | 100% | * 4
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The article ¡§Pain at checkout as WA bananas go east¡¨ by Regina Titelius and Jennifer Eliot states that in the wake of cyclone Larry¡¦s unforgiving wrath on Queensland‚ banana prices have soared throughout the nation over the last month and are expected to rise even more following WA¡¦s wholesaler Mercer Mooney declared that Carnarvon bananas would be shipped east. Following cyclone Larry¡¦s destruction on Queensland‚ it has wiped out about 80 per cent of Australia¡¦s bananas destroying fruit worth
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Introduction to Economics: In class exercise - part 2 - Chapter 4 Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The cross elasticity of demand is calculated as the percentage change in the 1) _______ A) price of one good divided by the percentage change in the price of another good. B) quantity demanded of one good divided by the percentage change in the price of
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Economics How The Market Works THE ECONOMIC PROBLEM WHAT IS THE PROBLEM? Needs‚ Wants and Resources Needs Something essential to survival Wants Something you would like to have Resources Something used to produce output FACTORS OF PRODUCTION Can’t produce enough goods and services to satisfy everyone’s wants and needs Economic resources are scarce‚ human wants are infinite Factors of Production Factor Definition Examples Land Includes both land itself and all natural resources. Naturally
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TUTORIAL 2: Topic 1: The Firm and Its Goals 1) a. If a stock is expected to pay an annual dividend of $20 forever‚ what is the approximate present value of the stock‚ given that the discount rate is 5%? b. If a stock is expected to pay an annual dividend of $20 forever‚ what is the approximate present value of the stock‚ given that the discount rate is 8%? c. If a stock is expected to pay an annual dividend of $20 this year‚ what is the approximate present value of the stock
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Oligopolistic markets‚ such as supermarkets or car manufacturing‚ can be defined in terms of market structure or in terms of market conduct. An oligopolistic market is one that has several dominant firms with the power to influence the market they are in; an example of this could be the supermarket industry which is dominated by several firms such as Tesco‚ Sainsbury’s‚ and Waitrose etc... Furthermore an oligopolistic market can be defined in terms of its structure and its conduct‚ which involve
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change in one variable to the percent change in another variable. It is the measure of the responsiveness of quantity demanded to a change in the price level of the product‚ a product may be perfectly elastic‚ perfect inelastic and unitary‚ when a good’s elasticity is perfectly inelastic then a change in the price of the product will not change the amount demanded‚ a perfect elastic product is that which its demand will change by a large magnitude than the change in price. It is a tool for measuring
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