Your Name:___Yurui Yao_____________________
Instructor: Jim Borer, MBA
Homework Assignment #3 due by 11:59 PM on February 7 (100 points) Part 1: Answer the following multiple choice (MC) questions (you may highlight, bold, or enter a letter in the blank – 2 points each): 1. __D____ If the price of a sub sandwich increases by 2% and the quantity demanded falls by 5%, then there will be a. an increase in the price elasticity of demand. b. an increase in the price elasticity of supply . c. a shift in the demand curve. d. a decrease in revenue. 2.___A___If an increase in the price of a good leads to no change in the quantity demanded, then the demand for the good is a. perfectly inelastic b. perfectly elastic c. elastic d. unit elastic.
3. ___D___ Figure 3.2 shows the market for milk. According to this diagram what happens to revenue when the price of milk falls from $3.00 to $1.00? a. Revenue falls from $3,000 to $1,000 b. Revenue rises from $1,000 to $3,000 c. Revenue remains unchanged at $1,000 d. Revenue remains unchanged at $3,000. 4. __C____Figure 3.2 shows the market for milk. According to this diagram, the demand for milk is a. perfectly elastic b. perfectly inelastic c. unit elastic d. income elastic.
5. __D___ Figure 3.3 shows demand for bread. Using the elasticity formula, the price elasticity of demand over the range from $1.00 to $1.50 is closest to which of the following? a. -0.50 b. -0.60 c. -1.45 d. -1.67
6. __D____ Again, referring to Figure 3.3, according to the diagram the demand for bread is a. unit elastic at all prices. perfectly in elastic at all prices c. perfectly elastic at all prices d. varies along the demand curve depending on the price. 7. __A____ Again, referring to Figure 3.3, the demand for bread is a. more elastic at higher prices of bread. b. less elastic at higher prices of bread. c. always unit elastic. d. always perfectly...