You are told that the price elasticity of demand for widgets is -0.75, the income elasticity of widgets is 2, and the cross-price elasticity of widgets and gadgets is 4. Carefully explain what information you can gather from each of these figures
What will be an ideal response?
Demand for this good is inelastic with respect to price. This is a normal good as income elasticity is greater than zero, and it is a luxury/superior good as income elasticity is greater than one. Widgets and gadgets are substitutes, and they are good substitutes because cross-price elasticity is elastic (large).
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Which one of the following statements is true?
a. A static reserve index will indicate a longer resource lifetime than an exponential reserve index b. An exponential reserve index indicates a longer resource lifetime than a static reserve index c. Eventually all sub-economic reserves of non-renewable resources will be depleted d. Eventually all physical reserves of non-renewable resources will be depleted e. Sub-economic resources or reserves can never become economic resources or reserves f. All of the above. g. None of the above.
Refer to the information. The marginal cost of the third unit of output is:
The Sunshine Corporation finds that its costs are $40 when it produces no output. Its total variable costs (TVC) change with output as shown in the accompanying table. Use this information to answer the following question.
A. $105.
B. $25.
C. $15.
D. $20.