Answered: price elasticity of its product is -2.5…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 9E

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Please tell me which of the multiple choice awnsers are correct for following questions.Please tell me only which ones are correct no explanation necessary

A firm selling ready meals discovers that the price elasticity of its product is -2.5 and the income elasticity of its product is 1.5. Given this information, which of the following statements are true?

Select one or more:

a. A 10% rise in consumer income will lead to a 1.5% rise in sales of its ready meals.

b. A 5% rise in the price of its product will lead to a 12.5% fall in sales of its ready meals.

c. A 4% fall in the price of its product will lead to a 10% fall in sales of its ready meals.

d. A 6% rise in consumer income will lead to a 9.0% rise in sales of its ready meals.

Given a perfectly competitive firm, which of the following statements are true?

Select one or more:

a. In the long run, the firm can make profits greater than normal profit.

b. Marginal revenue will be less than price.

c. In the short run, the firm can make profits greater than normal profit.

d. In the short run, average cost cannot be greater than price.

A firm doubles its inputs and discovers that its output has trebled. The prices of the inputs remain constant. This is an example of:

Select one or more:

a. Constant returns to scale.

b. Increasing returns to scale.

c. Dis-economies of scale.

d. Economies of scale.

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