A) supply is inelastic and demand is elastic. B) supply is elastic and demand is elastic. C) supply is inelastic and demand is inelastic. D) supply is elastic and demand is inelastic. Question 7 Which of the following statements is not true? Economies of scale A) means lower average cost when production increases. B) can arise as a result of specialisation of labour. C) are different than economies of scope. D) cannot arise on a market with perfect competition. Question 8 If a rise in the price of good X results in the amount of money spent Good Y remaining the same, then Page 3 of 10 23 of 1432 words English (United Kingdom) Focus

A) supply is inelastic and demand is elastic. B) supply is elastic and demand is elastic. C) supply is inelastic and demand is inelastic. D) supply is elastic and demand is inelastic. Question 7 Which of the following statements is not true? Economies of scale A) means lower average cost when production increases. B) can arise as a result of specialisation of labour. C) are different than economies of scope. D) cannot arise on a market with perfect competition. Question 8 If a rise in the price of good X results in the amount of money spent Good Y remaining the same, then Page 3 of 10 23 of 1432 words English (United Kingdom) Focus

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 5SQ

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Only typed answer Firm X introduces a new good A in the market. The laws of demand and supply hold for this good. The firm produces 500 units of A per month. The good does not have any close substitutes and is priced at $4 per unit. Consumers like this new product and industry analysts expect the price to rise as much as $7 before an equilibrium is reached in this market. At equilibrium, the industry analysts expect quantity demanded and supplied to be 650 units. However, Patrick Clearwater, the operations head at firm X, believes that even at a price of $7 per unit, there will still be a shortage of 100 units. Which of the following, if true, will support Patrick's view? A. There was a price ceiling at $7 which has been removed. B. Good A is an inferior good. C. Price elasticity of supply is actually lower than what is expected by the industry analysts. D. The demand for good A is highly inelastic. E. At a price of $7 per unit, the firm supplies 750 units of…
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