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Unformatted text preview: a point on the demand curve where demand is inelastic
*c. It must be at a point on the demand curve where demand is unit elastic
d. More information about demand is required.
e. It could be anywhere on the demand curve. It depends on price.
[see chapter 4 of HGLO or the lecture slides]
19. Consider the two demand curves labelled D1 and D2 in the diagram below. At a price of p, which
of the following is true? Price ($) D1 p D2
a. D1 and D2 have the same slope.
b. D1 and D2 have the same own price elasticity of demand.
c. D1 and D2 have different slopes, and D1 has a higher own price elasticity of demand in absolute
value terms than D2. *d. D1 and D2 have different slopes, and D1 has a lower own price elasticity of demand in absolute
value terms than D2.
e. More information is required to answer this question.
[D1 is less responsive to price.]
20. Let demand be represented by qd = 16 – P, where qd is the quantity demanded and P is the price
in dollars. Let supply be represent by qs = 3P, where qs is the quantity supplied. Calculate the
consumer and producer surplus at the market equilibrium.
*a. Consumer surplus is $72 and producer surplus is $24.
b. Consumer surplus is $56 and producer surplus is $24
c. Consumer surplus is $8 and producer surplus is $4
d. Consumer surplus is $24 and producer surplus is $48
e. None of the above.
[The equilibrium is q=12 and p=4. See HGLO chapter 5]...
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