Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)
20th Edition
ISBN: 9780077660819
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 10.6, Problem 4QQ
To determine
Percentage changes in price.
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a. The price elasticity of demand for a firm’s product is equal to –1.75 over the range of prices being considered by the firm’s manager. If the manager increases the price of the product by 9 percent, the manager predicts the quantity demanded will ________ (increase, decrease) by ________ percent.
b. The price elasticity of demand for an industry’s demand curve is equal to –1.75 for the range of prices over which supply decreases. If total industry output is expected to decrease by 14 percent as a result of the supply decrease, managers in this industry should expect the market price of the good to ________ (increase, decrease) by ________percent.
If total revenue rises by 20% when the price increases by 5%, this means:. Single choice.
(1 Point)
demand is price inelastic
demand is price elastic
demand is unit elastic
demand is perfectly inelastic
1717,
Implicit costs are:. Single choice.
(1 Point)
equal to total fixed costs.
comprised entirely of variable costs.
"payments" for self-employed resources.
always greater in the short run than in the long run.
1818,
With fixed costs of $400, a firm has average total costs of $3 and average variable costs of $2.50. Its output is:. Single choice.
(1 Point)
200 units.
400 units.
800 units.
1,600 units.
1919,
When firms advertise their product, they are trying to:. Single choice.
(1 Point)
Shift the demand curve to the right
Make the demand curve steeper
Make demand for the product more inelastic
All of the above
. Mr DIY is a new small scale palm oil supplier. There are many small scale palm oil suppliers in the market. The price of oil palm is solely determined by the market demand and supply. Describe the market characteristics of this industry. As Mr DIY is a new firm in the market, his firm is facing a problem of revenue lesser than the total variable costs. Illustrate the situation with an appropriate diagram(s). Evaluate the situation of this firm and provide one suggestion for the firm to sustain in the long run.
Chapter 10 Solutions
Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)
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