Quiz

Quiz

Question 1 (1 point)

Saved

Sales of shampoo by Clean-Hair, Inc. have recently decreased from 1,300 to 1,100 units in response to a price decrease from $7 to $5 by its main competitor. Assuming that everything else is being held constant, we can infer that:

Instructor Explanation: The answer can be found by using the midpoints formula:

 

 

 

Question 1 options:

the cross-price ARC-elasticity (midpoints formula) between the two products is -½.

the cross-price ARC-elasticity (midpoints formula) between the two products is -2.

the cross-price ARC-elasticity (midpoints formula) between the two products is ½.

the cross-price ARC-elasticity (midpoints formula) between the two products is 2.

Question 2 (1 point)

Fast food is believed to be an inferior good. This means that:
Question 2 options:

Question 3 (1 point)

Let D0 and S0 be the initial demand and supply curves for gasoline. Let P* and Q* be the initial equilibrium in this market. There is an increase in incomes due to a technology boom. Which ONE of the following correctly captures the effect of this change on the market for gasoline?
Question 3 options:

Question 4 (1 point)

In general, which of the following implies that a marginal cost curve will eventually increase as a firm produces more output?
Question 4 options:

Question 5 (1 point)

The general rule for profit maximization in a firm is to:
Question 5 options:

Question 6 (1 point)

Over time, learning costs per unit tend to:
Question 6 options:

Question 7 (1 point)

Bob owns an auto parts firm. He uses a combination of steel and aluminum to produce his auto parts. All of the following combinations will finish the task on time. Steel costs $15 per unit and the aluminum costs $50 per unit. What combination of steel and aluminum should he use?
Question 7 options:

Question 8 (1 point)

If a company has significant economies of scale in the long run – assuming a large market — the company will tend to:
Question 8 options:

Question 9 (1 point)

You work for Starbucks and know the following elasticities:

η= 1.2 η I = 2 η xy1 = 0.4 η xy2 = -0.6

η is the price elasticity of demand for a Starbucks Tall Caramel Macchiato, ηxy1 is the cross elasticity of demand between a Starbucks Tall Caramel Macchiato and Java City’s Large Caramel Javalanche, ηxy2 is the cross elasticity of demand between a Starbucks Tall Caramel Macchiato and a Starbucks blueberry muffin, and η I is the income elasticity of a Starbucks Tall Caramel Macchiato.

a) If the manager wants to increase his sales of Tall Caramel Macchiato by 6%, in what direction and by how much does he need to change the price?

b) If the manager makes the percentage price change that you calculated in part a) will total revenue increase or decrease? How do you know?

c) Starbucks raises its price of a Tall Caramel Macchiato by 10%. The demand for Starbucks blueberry muffins will change by what percentage and in what direction?

d) Java City lowers the price of its Large Caramel Javalanche by 5%. The demand for Starbucks’ Tall Caramel Macchiato will change by what percentage and in what direction?

e) If average income increases by 3% by what percentage and in what direction will the demand for Starbucks’ Tall Caramel Macchiato change? Is a Tall Caramel Macchiato a normal good or an inferior good and how do you know?

Question 9 options:

"Get Help With Your Essay
. If you need assistance with writing your essay, our professional essay writing service is here to help!

Order Now