QUESTION 19 Exhibit 33 Quantity Refer to Exhibit 33 A moveme

QUESTION 19 Exhibit 3-3 Quantity Refer to Exhibit 3-3. A movement from point Z to point W would have been the result of a. a price reduction b. an increase in the number of buyers O c. a decline in technology O d. an increase in population QUESTION 20 Exhibit 5-3 Quantity Demanded of Good A Quantity Supplied of Good A Price of Good A $5.50 $4.50 $3.50 $2.50 $1.50 $0.50 15 25 35 45 45 35 25 15 Refer to Exhibit 5-3. When price decreases from $5.50 to $4.50, the price elasticity of demand is O a. 2.0 o b. 1.0 ? ?. 0.5 O d. 5.0

Solution

Q1. Answer is a. a price reduction. Q2. Answer is d. 5.0 Explanation: Original price: 5.50 New price =4.50 Average price: 5.00 Change in price =-1 % change in price: -1 / 5.00= -20 Original demand:5 New demand: 15 Average demand: 10 Change in demand: 10 % Change in demand: 10 /10 =100% Price Elasticity of demand: % Change in demand/ % Change in price 100% / -20% = 5