EQ5 answers Fall 2010

EQ5 answers Fall 2010 - EQ EQ #5 AGEC AGEC 105 (1/2 pt) (4...

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Unformatted text preview: EQ EQ #5 AGEC AGEC 105 (1/2 pt) (4 pts) September 27, 2010 1. The concept of the elasticity of demand was originated by ____ALFRED MARSHALL_____. 2. Suppose that the own-price elasticity for Ragu spaghetti sauce is -1.2. (1 pt) a. So a 10 percent increase in price yields a __12____ % decrease in quantity demanded of Ragu spaghetti sauce. b. For manufacturers of Ragu spaghetti sauce to increase sales revenue, they should raise price. TRUE or FALSE. 3. Suppose that the demand curve for a particular product is given as: ∆Q = −30 P = $7 P $10 $8 $6 A B (1/2 pt) (2 pts) ∆P = $2 Q = 35 own − price elasticity = ∆Q P − 30 7 ×= × = −3 ∆P Q 2 35 20 50 80 Q Calculate the own-price elasticity of demand for this product between points A and B. Show all work. Elastic demand ...
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