Supposethepriceelasticityofsupplyforcandlesis0.3intheshortrunand1.2inthelongrun.Ifanincreaseinthedemandforcandlescausesthepriceofcandlestoincreaseby36%,thenthequantitysuppliedofcandleswillincreasebyabout
A. 0.8% in the short run and 3.3% in the long run.
B. 1.2% in the short run and 0.3% in the long run.
C. 10.8% in the short run and 43.2% in the long run.
D. 120% in the short run and 30% in the long run.
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Amanufacturerproduces400unitswhenthemarketpriceof$10perunitandproduces600unitswhenthemarketpriceis$12perunit.Usingthemidpointmethod,forthisrangeofprices,thepriceelasticityofsupplyisabout
A. 0.45
B. 2
C. 2.2
D. 220
Thesupplyofagedcheddarcheeseisinelastic,andthesupplyofbreadiselastic.Bothgoodsareconsideredtobenormalgoodsbyamajorityofconsumers.Supposethatalargeincometaxincreasedecreasesthedemandforbothgoodsby10%.Totalconsumerspendingonagedcheddarcheesewill
A. increase, and total consumer spending on bread will increase.
B. increase, and total consumer spending on bread will decrease.
C. decrease, and total consumer spending on bread will increase.
D. decrease, and total consumer spending on bread will decrease.
Ifachangeinthepriceofagoodresultsinnochangeintotalrevenue,then
A. the demand for the good must be elastic.
B. the demand for the good must be inelastic.
C. the demand for the good must be unit elastic.
D. buyers must not respond very much to a change in price.
Youhavejustbeenhiredasabusinessconsultanttodeterminewhatpricingpolicywouldbeappropriateinordertoincreasethetotalrevenueofabakery.Thefirststepyouwouldtakewouldbeto
A. increase the price of every loaf of bread in the store.
B. look for ways to cut costs and increase profit for the bakery.
C. determine the price elasticity of demand for the bakery's products.
D. determine the price elasticity of supply for the bakery’s products.
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