191 complements b 191 substitutes c 052 complements d

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Unformatted text preview: ______ and beef and pork are ________: a. -1.91; complements b. -1.91; substitutes c. -0.52; complements d. -0.52; substitutes *e. None of the above [Since pork and beef are substitutes the cross price elasticity should be positive] 12. A consumer doubles her expenditure on ice cream consumed when price increases by 25%. As a result we can say that over this section of the demand curve, in absolute value terms own price elasticity of demand for ice cream is: *a. Greater than 1 b. Equal to 1 c. Less than 1 but greater than zero d. Zero e. More information is required to answer this question [A 200% quantity increase caused by a 25% price increase is an elasticity of 8] 13. Consider the demand and supply curves for diesel: Qd= 700 –P, Qs=2p-200. At the competitive equilibrium, total surplus (sum of producer and consumer) is equal to: a. 40000 b. 80000 *c. 120000 d. 240000 e. None of the above [The equilibrium is Q=400 and P=300. For information on how to calculate surplus see HGLO ] 14. Assume that the demand for Kellogg’s Corn Flakes is given by P=4 and the supply of Kellogg’s Corn Flakes is given by P=2Q. In equilibrium: *a. Demand is perfectly elastic and consumer surplus is equal to 0 b. Demand is perfectly inelastic and producer surplus is equal to 6 a. Supply is perfectly elastic and consumer surplus is equal to 16 b. Supply is perfectly inelastic and producer surplus is equal to 0 e. None of the above [Perfectly elastic demand is a horizontal line] 15. For the supply curve p=25+4Q at a price of 65...
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