It must be at a point on the demand curve where

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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 Quantity Q 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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This test prep was uploaded on 03/09/2014 for the course ECON 1001 taught by Professor - during the Three '07 term at University of Sydney.

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