Pls answer all question Which of the following would cause a

Pls answer all question

Which of the following would cause a demand curve for a good to be price inelastic? O The good is a luxury. O There are a great number of substitutes for the good O The good is a necessity O None of these answers 1. 2. If isoquants are plotted on a graph with capital measured on the vertical axis and labor on the horizontal axis, then an increase in the wage rate will cause the isocost line O to become steeper and the optimal quantity of labor will decrease. O to become steeper and the optimal quantity of labor will increase. O to become flatter and the optimal quantity of labor will decrease O to become flatter and the optimal quantity of labor will increase. 3. Under the dominant-firm price leadership model, O all firms but the dominant firm are price takers O the dominant firm acts as the residual monopolistic supplier. O All of the above are correct.

Solution

Question 1. Demand curve is inelastic when a given percentage change in the price brings only a small percentage change in the quantity demanded. Foreign For luxuries, demand is generally elastic because a slight increase in the price can reduce the quantity demanded dramatically. When great number of substitutes are present the demand becomes elastic again. Necessities are however expected to have inelastic demand because consumer purchase them even if their prices are increased. Correct choice is the good is a necessity.

Question 2. An increase in the wage rate will reduce the horizontal intercept so that the budget line becomes steeper. The optimum input mix in such a condition will have fewer labour units. The correct option is to become is steeper and the optimal quantity of labour will decrease

Question 3. All the options are correct. All the firms in such a market are price takers and the price is determined by the dominant firm. The dominant firm producers from the residual demand curve. And the demand curve faced by dominant firm is there therefore flatter than the the market demand curve

Question 4. From the given demand and supply question, the optimum quantity is 3 and the optimum price is 100. Consumer surplus is the area below the demand curve in about the priceline. It is given by 0.5 x (190 - 100) x 3 which gives the consumer surplus equals to 135.

Question 5. The implicit cost of production increases the total cost and therefore reduces the profit. Accounting profit generally agnores implicit cost so it is unchanged while economic profit is reduced. Hence the correct choice is accounting profit will exceed economic profit.