if a 10% increase in the price of a good leads to a 20% decrease in the quantity demanded, the demand for…

if a 10% increase in the price of a good leads to a 20% decrease in the quantity demanded, the demand for this good is:\na) perfectly inelastic.\nb) inelastic.\nc) unit elastic.\nd) elastic.\n\na movement along the supply curve for a good is caused by:\na) a change in the number of producers.\nb) a change in the price of the good itself.\nc) a change in the technology used to produce the good.\nd) a change in the price of inputs.\n\nif a government - imposed price floor of $10 is placed on a market where the equilibrium price is $8, what is the result?\na) a shortage of the good.\nb) a surplus of the good.\nc) the market price will remain at $8.\nd) the demand for the good will increase.\n\ntotal economic surplus in a market is the sum of:\na) government revenue and deadweight loss.\nb) the quantity supplied and the quantity demanded.\nc) consumer surplus and producer surplus.

if a 10% increase in the price of a good leads to a 20% decrease in the quantity demanded, the demand for this good is:\na) perfectly inelastic.\nb) inelastic.\nc) unit elastic.\nd) elastic.\n\na movement along the supply curve for a good is caused by:\na) a change in the number of producers.\nb) a change in the price of the good itself.\nc) a change in the technology used to produce the good.\nd) a change in the price of inputs.\n\nif a government - imposed price floor of $10 is placed on a market where the equilibrium price is $8, what is the result?\na) a shortage of the good.\nb) a surplus of the good.\nc) the market price will remain at $8.\nd) the demand for the good will increase.\n\ntotal economic surplus in a market is the sum of:\na) government revenue and deadweight loss.\nb) the quantity supplied and the quantity demanded.\nc) consumer surplus and producer surplus.

Answer

Explanation:

Step1: Calculate price - elasticity of demand for the first question

The formula for price - elasticity of demand ($E_d$) is $E_d=\frac{%\text{ change in quantity demanded}}{%\text{ change in price}}$. Given that $%\text{ change in price}=10%$ and $%\text{ change in quantity demanded}=- 20%$, then $E_d=\frac{-20%}{10%}=-2$. Since $|E_d| = 2>1$, the demand is elastic.

Step2: Analyze the cause of movement along the supply - curve for the second question

A movement along the supply curve is caused by a change in the price of the good itself. Changes in the number of producers, technology, or input prices shift the supply curve.

Step3: Determine the effect of price - floor for the third question

A price floor is a legal minimum price. If the price floor ($$10$) is above the equilibrium price ($$8$), the quantity supplied will be greater than the quantity demanded, resulting in a surplus of the good.

Step4: Define total economic surplus for the fourth question

Total economic surplus in a market is the sum of consumer surplus and producer surplus.

Answer:

  1. d) Elastic
  2. b) A change in the price of the good itself.
  3. b) A surplus of the good.
  4. c) Consumer surplus and producer surplus.