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Author Question: Suppose that, at the market clearing price of natural gas, the price elasticity of demand is -1.2 ... (Read 148 times)

tiara099

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on: Jul 1, 2018
Suppose that, at the market clearing price of natural gas, the price elasticity of demand is -1.2 and the price elasticity of supply is 0.6. What will result from a price ceiling that is 10 percent below the market clearing price?
 
  A) A shortage equal to 1.8 percent of the market clearing quantity
  B) A shortage equal to 0.6 percent of the market clearing quantity
  C) A shortage equal to 18 percent of the market clearing quantity
  D) A shortage equal to 6 percent of the market clearing quantity
  E) More information is needed.

Question 2

For the firm's cost minimization problem, one of the key assumptions for each input is that:
 
  A) marginal product is constant.
  B) marginal product is increasing at a decreasing rate.
  C) marginal product is increasing at an increasing rate.
  D) marginal product is decreasing at an increasing rate.


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taylorsonier

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Reply #1 on: Jul 1, 2018
Answer to Question 1

C

Answer to Question 2

B


tiara099

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Reply #2 on: Jul 1, 2018
Correct answers!


taylorsonier

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Reply #3 on: Jul 1, 2018
Great! Please up vote :D


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