Suppose that you have returned from your fishing expedition with 20,000 fish. The market price is 3 per fish. Your average fixed cost was 1 and your total variable cost was 5,000 . If the price jumps to 3.50 before you sell your first fish, how much extra profit, if any, do you earn?
a. 10,000.
b. 25,000.
c. 30,000.
d. 45,000.
e. 70,000.
Question 2
If the price elasticity of supply equals zero, this implies that:
a. suppliers can easily change the quantity supplied of the product as the price of the product changes.
b. the period under consideration is a very long-run time period.
c. the supply curve is perfectly vertical.
d. the percentage change in quantity supplied exceeds the percentage change in product price.
e. the percentage change in quantity supplied equals the percentage change in product price.
