Problem_set5_-_solutions - EC201 Introduction to...

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EC201 Introduction to Microeconomics (G.Lepori) Spring 2008 1 Name:_______________________ Student Number:_______________ Problem set # 5 (Due on Tuesday 02/12/2008, by 12:40pm) Please staple all the pages together. Circle the most appropriate answer to the following questions (each question is worth 1 point): 1) If the price elasticity of supply is 1.5 and a price increase led to a 1.8% increase in quantity supplied, then the price increase amounted to a. 0.67%. b. 0.83%. c. 1.20%. d. 2.70%. ANS: C 2) If the quantity supplied responds only slightly to changes in price, then a. supply is said to be elastic. b. supply is said to be inelastic. c. an increase in price will not shift the supply curve very much. d. even a large decrease in demand will change the equilibrium price only slightly. ANS: B 3) Which of the following statements is valid when the market supply curve is vertical? a. Market quantity supplied does not change when the price changes. b. Supply is perfectly elastic. c. An increase in market demand will increase the equilibrium quantity.
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This note was uploaded on 03/30/2008 for the course ECON 201 taught by Professor C.liedholm during the Spring '07 term at Michigan State University.

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Problem_set5_-_solutions - EC201 Introduction to...

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