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24. Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent. If the price elasticity of demand is 3.5, the company must A) raise the price of a computer by 1.714 percent. B) raise the price of a computer by 0.21 percent. C) lower the price of a computer by 0.21 percent. D) lower the price of a computer by 0.58 percent. E) lower the price of a computer by 1.714 percent.

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Irving Heathcote
Irving HeathcoteLv2
13 Dec 2017
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Related questions

1) 1) Suppose the government of Nova Scotia wants to reduce the consumption of electricity by 5 percent. The price elasticity of demand for electricity is 0.40. You advise the Nova Scotia government to A) lower the price of electricity by 2 percent. B) raise the price of electricity by 12.5 percent. C) raise the price of electricity by 2 percent. D) stay away from the market for electricity and let the market mechanism fix the problem. E) lower the price of electricity by 12.5 percent.

The demand for computers in a certain country is given by D = 20000 – 300P; where P is the price of a computer. Supply by domestic computers producers is S = 10000 + 100P.

(a) Assuming that the economy is closed, find the equilibrium price and production quantity of computers.

(b) The economy opens to trade. The world price of a computer is $20. Find the domestic quantities demanded and supplied and the quantity of imports or exports. Who will support the opening of the computer market to trade and who will oppose it?

(c) The government imposes a tariff of $1 per computer. Find the effects on domestic quantities demanded and supplied and on the quantity of imports or exports. Also find the tariff revenue collected by government. Who will support the imposition of tariff and who will oppose it?

(d) Suppose the government imposes an import quota of 1600 computers. Find the equilibrium price in the domestic computer market, as well as the quantities produced by domestic firms and purchased by domestic consumers.

Suppose buyers of computers and computer software regard the two goods as complements. Then an increase in the price of computer software will cause a(n):

   

a. increase in the equilibrium price of computers and a decrease in the equilibrium quantity of computers.
   

b. decrease in the equilibrium price of computers and an increase in the equilibrium quantity of computers.
   

c. decrease in the supply of computers and a decrease in the quantity demanded of computers.
   

d. decrease in the demand for computers and a decrease in the quantity supplied of computers.

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