b.
In this
case, if you want to increase total
revenue, you should decrease your price.
c.
This result is a move downward
along the demand curve.

**
If income
increases, which good from the list below is likely to experience the largest decrease in the
quantity
demanded?
D.
old canned meat
** A firm will never operate
below
the midpoint of a linear demand
curve, where demand is
inelastic
**
Revenue from Mobile Phones.
Consider the demand for mobile phones. Suppose the price elasticity
of demand for the market as a whole is 0.7
.
a.
If all mobile phone companies simultaneously increase
their
prices, total revenue will increase
.
b.
If a single mobile phone company increases its
prices, we can expect the
company's total revenue to
decrease
** To compute the price elasticity of
demand, we divide the percentage change in
quantity demanded
by the percentage change in
price
and then take the
absolute value
of the ratio.
**
Import Restrictions and the Price of Steel.
Suppose import restrictions on steel decrease the supply
of steel by 24 percent. The initial price of steel is
$100 per
unit, the elasticity of demand is
0.70, and the
elasticity of supply is 2.3. The equilibrium price of steel will increase
by
8
percent
(enter your response
as an integer)
.
Use the line drawing tool
to approximate and label the new supply curve. Be sure the new supply curve
illustrates the new equilibrium price correctly.

The Average Cost of Drama DVDs.
You have been hired to produce a DVD of a play put on by a
high-
school drama club. It will take you about 50 hours to make the master that is stored on a hard drive on
your computer. The opportunity cost of your time is
$20 per hour. The marginal cost of burning DVDs is
constant at
$2.
(
Enter
each of the following as an integer
value
.)
The total cost and average cost of the first DVD is
$
1,002
. The average cost of the 50
th
DVD is $
22
.
The average cost of the 100
th
DVD is $
12
.
Use the
3-point curved line drawing tool
to
draw
the
average-cost curve for producing the
DVD, with quantities up to 100 DVDs.
(Your coordinates do not
need to be
precise.).
Properly label this curve.
Carefully follow the instructions
above, and only draw the required
objects.

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- Summer '11
- Creamer
- Economics