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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Solve Question no. 1 . HAND WRITTEN SOLUTIONS ARE STRICTLY PROHIBITED
a. Assume that the elasticity of demand for Fanta is -0.5 while the elasticity of supply is 0.7. Assuming further that a tax of K10 is applied on each bottle of Fanta sold, how much of this will be borne by producers. b. Assume that the price of good X is K10 while that of good Y is K20. A consumer has allocated consumption between the two goods in such a way that the marginal utility of X is 15 utils and that of Y is 25 utils. Is this an optimal consumption bundle? If not, what should the consumer do to reach the optimum?
Question 4 If the semi-elasticity between x and y is -2, what does it mean? A. When x decreases by 2%, y increases by 5% B. When x decreases by 1 unit, y increases by 2% C. When x decreases by 1%, y increases by 2 units OD. When x increases by 1%, y decreases by 2 units E. When x increases by 2%, y decreases by 4% OF. None of the options given are correct
Figure 5-4 Price A B O less than 1 but greater than zero. equal to 1. O greater than 1. O equal to zero. Demand Refer to Figure 5-4. Suppose the point labeled B is the "halfway point" on the demand curve and it corresponds to a price of $5.00. Then, between prices of $4.99 and $5.01, the price elasticity of demand is с Quantity
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