Variable cost divided by the change in quantity produced is
a. average variable cost.
b. marginal cost.
c. average total cost.
d. None of the above is correct.
d
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Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are
A) a normal good with a price elasticity of demand of 0.5. B) a substitute good with a cross elasticity of 0.5. C) a good with a price elasticity of supply of -0.5. D) an inferior good with an income elasticity of -0.5. E) an inferior good with an income elasticity of -2.0.
When does a decrease in supply raise the price more: When demand is elastic or when demand is inelastic? When OPEC decreases the supply of oil, the price of gasoline skyrockets. Hence is the demand for gasoline elastic or inelastic?
What will be an ideal response?