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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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 Fall '07
 Dickenson
 Microeconomics

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