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Q16 bologna has an income elasticity of and steak has

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Unformatted text preview: e elasticity of ___ and steak has an income elasticity of___. a) b) c) d) e) 1.5; -1.5 1.0; -1.0 -1.0; 1.0 -0.5; 0.5 -5.0; 5.0 Solution: e) -5.0; 5.0 %∆Q (6 − 10) /[(6 + 10) / 2] Bologna: ε I = = = −5 %∆I (21000 − 19000) /[(21000 + 19000) / 2] Steak: ε I = %∆Q (5 − 3) /[(5 + 3) / 2] = =5 %∆I (21000 − 19000) /[(21000 + 19000) / 2] Page 10 of 33 ©Prep101 www.prep101.com/freestuff Suppose the market for good A is regulated and there is a strictly enforced price ceiling at $25 per unit. Use the following graph to answer question 17: Price ($) S 45 35 25 D 20 40 60 Quantity of good A Q17. Which of the following statements is true about the market for good A? a) b) c) d) e) 20 units of good A are sold at a price of $25 per unit 60 units of good A are sold at a price of $25 per unit 20 units of good A are sold at a price of $45 per unit 40 units of good A are sold at a price of $35 per unit 60 units of good A are sold at a price of $45 per unit Solution: a) 20 units of good A are sold at a price of $25 per unit At $25 per unit, buyers are willing to buy 60 units, but sellers offer only 20 units. When 20 u...
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