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Economics_Ch05

# Firm a sold 400 stereos for a total of 200000 and

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Unformatted text preview: cost, or per-unit cost, of a house? 2. Firm A sold 400 stereos for a total of \$200,000, and firm B sold 550 stereos for a total of \$275,000. Which firm is charging more per unit? Graph the supply curve. 3. If the percentage change in price is 5 percent and the percentage change in quantity supplied is 10 percent, calculate the elasticity of supply. 4. Currently the price of a good is \$10, and the quantity supplied is 300 units. For every \$1 increase in price, quantity supplied rises by 5 units. What is the quantity supplied at a price of \$22? Use Exhibit 5-8 to answer the following questions. P = price, and Qs = quantity supplied. 1. What does Exhibit 5-8(a) represent? 2. Which part of Exhibit 5-8 represents a change in supply due to technological advancement? 5-8 EXHIBIT S2 S1 S1 S S2 B P A Qs 0 (a) (b) (c) 3. What does Exhibit 5-8(c) represent? 4. Which part of Exhibit 5-8 represents a change in supply due to an increase in resource prices? Solving Economic Problems 1. Application. The law of supply pertains to many goods. For example, if the price of shoes rises, in time the quantity supplied of shoes will rise, too. Devise an experiment to test whether studying for an economics test is subject to the law of supply. 2. Cause and Effect. Explain the process by which a tax, applied to the production of a good, changes the supply of the good. Go to www.emcp.net/economics and choose Economics: New Ways of Thinking, Chapter 5, if you need more help in preparing for the chapter test. Chapter 5 Supply 127...
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