Suppose the price of a box of Kraft Dinner is reduced from 145 to 125 and as a

# Suppose the price of a box of kraft dinner is reduced

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4. Suppose the price of a box of Kraft Dinner is reduced from \$1.45 to \$1.25 and, as a result, the quantity of Kraft Dinner boxes demanded increases from 2000 to 2200. Using the midpoint method, what is the price elasticity of demand for Kraft Dinner boxes? a. 0.64 b. 0.75 c. 1.00 d. 1.56 5. When Brazil opens itself to world trade in beef, the domestic price of coffee beans rises. Which of the following describes this situation?

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EMILY VAN HOEVE ECON 1001 C 6. Suppose a tax is imposed on a market with an elastic demand and an inelastic supply. How is the burden of tax divided? 7. Theresa buys a new car for \$25,000. She receives a consumer surplus of \$5,500 dollars. How much was Theresa willing to pay for the car? 8. Last year, sellers of good A received \$100 and sold 50 units of good A. This year, they raised their price and took in \$120 and sold 40 units of good A. At the same time, the price of good B stayed the same, but sales of good B increased from 20 units to 40 units. Which of the following is true about goods A and B? a. They are complements and have a cross-price elasticity of 0.60. b. They are substitutes and have a cross-price elasticity of 1.67. c. They are complements and have a cross-price elasticity of 1.67 d. They are substitutes and a have a cross-price elasticity of 0.6. 9. What will happen to the equilibrium price and quantity of peanut butter if there is an increase in the number of people allergic to peanuts, the price of peanuts increases, the price of jam increases, and workers on peanut farms negotiate higher wages.
EMILY VAN HOEVE ECON 1001 C Use the above graphs to answer questions 3 and 4. 10. According to the above graph, for Abercrombie, what is the opportunity cost of making 1 shirt?

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