1. Suppose that an increase in the price of Widgets from $14 to $16 per Widget increases the quantity of Widgets supplied from 24 to 36 Widgets. Using the midpoint method, what is the elasticity of supply of Widgets? (a) 3.5 (b) 3 (c) 2.67 (d) 0.25

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Lelia LubowitzLv2

6 Jun 2018

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Use the following information to answer the next 3 questions. Widgets and Sprockets are substi- tutes. Suppose that Widgets have become more costly to produce. 8. What effect will the increase in the cost of producing Widgets have in the market for Widgets? (a) The equilibrium price and quantity of widgets rises. (b) The equilibrium price of widgets falls and the equilibrium quantity rises. (c) The equilibrium price and quantity of widgets falls. (d) The equilibrium price of widgets rises and the equilibrium quantity falls.

Use the following information to answer the next 3 questions. Widgets and Sprockets are substi- tutes. Suppose that Widgets have become more costly to produce. 8. What effect will the increase in the cost of producing Widgets have in the market for Widgets? (a) The equilibrium price of widgets rises and the equilibrium quantity falls. (b) The equilibrium price of widgets falls and the equilibrium quantity rises. (c) The equilibrium price and quantity of widgets falls. (d) The equilibrium price and quantity of widgets rises.

A. Why do governments raise taxes on cigarettes and alcohol to raise government revenues?

B- What changes do you make to your demand for gasoline when the prices start to climb up?

C- Would you want to own a business that sells price-elastic products or price-inelastic products? Why?

D. Let us say the price of widgets is $1.00. At this price, consumers demand 10 widgets. Now the widget seller increases the price to $1.50. At this new higher price, quantity demanded falls to 9 widgets. Are widgets elastic or inelastic? Please show your work.