(a) Due to the increase in the demand for video games, the equilibrium price of video games increases by 10 percent, and the equilibrium quantity increases by 5 ercent. Is the price elasticity of demand for video games elastic, inelastic, or indeterminate? Explain your answer (with calculation if possible). Is the price elasticity of supply of video games elastic, inelastic, or indeterminate? Explain your answer (with calculation if possible). (b) Suppose Marcus produces chocolate with two inputs: factory and labor. If the workers become more productive with better training, state whether the average fixed cost, average variable cost, average total cost, and marginal cost will rise or fall? (c) After one month of operation, OU Café determined to shorten its business hours and close on weekends. What costs, fixed or variable, should OU Café have considered when it made the de

The price elasticity of demand measures the % change in quantity demanded and % change in prices.…

Answered: (a) Due to the increase in the…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 2PA

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(a) Due to the increase in the demand for video games, the equilibrium price of video games increases by 10 percent, and the equilibrium quantity increases by 5 ercent.

Is the price elasticity of demand for video games elastic, inelastic, or indeterminate? Explain your answer (with calculation if possible).
Is the price elasticity of supply of video games elastic, inelastic, or indeterminate? Explain your answer (with calculation if possible).

(b) Suppose Marcus produces chocolate with two inputs: factory and labor. If the workers become more productive with better training, state whether the average fixed cost, average variable cost, average total cost, and marginal cost will rise or fall?

(c) After one month of operation, OU Café determined to shorten its business hours and close on weekends. What costs, fixed or variable, should OU Café have considered when it made the de

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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