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Author Question: If the price of almonds changed as a result of a change in the supply of almonds, is the demand for ... (Read 145 times)

Frost2351

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on: Jun 29, 2018
If the price of almonds changed as a result of a change in the supply of almonds, is the demand for almonds elastic or inelastic? Explain your an-swer.
 
  What will be an ideal response?

Question 2

Many fast-food restaurants have signs on their cash registers that read, Your meal is free if the cashier does not give you a receipt. What might be the purpose of such a sign? Hint: there is a moral hazard problem here.
 
  What will be an ideal response?


Briannahope

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The total revenue test indicates that the demand for almonds is elastic. The increase in the supply of almonds lowers the price but in-creases the total revenue. The total revenue test demonstrates that this outcomethe price and total revenue change in opposite directionsoccurs when the demand is elastic.

Answer to Question 2

In a fast-food restaurant it would be quite easy for the cashier to not ring up the purchase and simply pocket the cash. The sign is likely meant more as a warning to their employees to not steal. It is also a fairly cheap way of having someone else (the customer) do the monitoring of their employees behavior.


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