Kinh tế vĩ mô - Bài tập kinh tế vĩ mô chương 3 Microeconomics - Exercise with answer chapter 3 - Elasticity
1 If an increase in the price of pencils from $0.1 to $0.2 reduces the quantity demanded from 1000 pencils to 500 pencils, then the demand for pencils is perfectly inelastic => FALSE => Edp = => unit-elastic All points in a linear demand curve have the same value of price elasticity of demand (point elasticity) but different value of slope => FALSE The slope of a linear demand curve is constant but its elasticity is not Price elasticity of demand at the intersection of demand curve and horizontal axis is equal to price elasticity of demand at the intersection of demand curve and vertical axis => FALSE When demand is perfectly elastic, total revenue is maximum its maximum at the point b (which is middle-distant from the two ends of the curve) If demand for a good is inelastic, a rise in its price will result in a decline in total revenue => FALSE P rises, D inelastic => E % change in Q< %change in P => The fall in revenue form lower Q< the rise in R form higher P => TR rise If a good has many substitutes, an increase in its price will result in a rise in total revenue sub-> Price of A in -> D of B in -> Q of A de => ambiguous because it depends on the change in P and the change in Q of A Technological advanced which shifts the market supply curve to the right always raise total revenue received by producers S curve incrase -> P increase & Q increase -> TR increase If 10% increase in good A’s price leads to 10% increase in total revenue, demand for good A is unitary-elastic Del TR=Del Px Del Q => 10% = 10%x del Q => Del Q = 1% => E = 1/10=0.1 => inelastic When moving along a linear demand curve from the left to the right, total revenue initially decreases and then increases => FALSE 10 Considering two demand curves that parallel to each other, at the same price, the closer to the origin of the demand curve is, the more price elastic it is The elasticity of demand on the demand curve AB at point Q will be equal to QB/QA and at point R on the demand curve CD it is equal to RD/RC Because in a right-angled triangle OAB, PQ is parallel to OB: Therefore, QB/QA = OP/PA Hence, price elasticity at point Q on the demand curve: AB = Qb/QA = OP/PA At point R on the demand curve CD, price elasticity is equal to = RD/RC Because in the right-angled triangle OCD, PR is parallel to OD Therefore, RD/RC = OP/PC Hence, on point R on the demand curve CD, price elasticity = OP/PC Because PC is greater than PA, OP/PC < OP/PA Thus, price elasticity at price OP on the demand curve CD is less than that on the demand curve AB => the demand curve shifts to the right the price elasticity of demand at a given price goes on declining the closer to the origin of the demand curve is, the more price elastic it is 11 An increase in Iphone’s price makes the demand curve of Samsung (D1) shift to the right to (D2) and this (D2) is more elastic than (D1) at any quantity level (in absolute value) RM2 cắt AB X, price X E, quantity X F => XB/XA=FB/FO RD/RC = FD/FO FB FB/FO this D2 is more Elastic than D1 at any Q level 12 If the government imposes a binding price floor and does not buy all the surplus amount then the absolute value of price elasticity of demand (point elasticity) will decrease in comparison with the initial equilibrium status => FALSE => PF>PE => E2 > E1 13 When there is a surplus in the market, sellers who sell the goods of which demand is relatively elastic must reduce their price slightly so as to make it come back to the equilibrium price level 14 When there is a shortage in the market, sellers who sell the goods of which demand is inelastic must raise their price significantly so as to return to the equilibrium price level 15 The demand for milk should be more elastic than the demand for TH True Milk TH true milk is narrowly defined good, Milk is broadly defined goods But Price elasticity is higher for narrowly defined goods than for broadly defined ones so that the demand for milk should be less elastic than the demand for TH True Milk 16 The demand for gasoline over weeks is more elastic than that over years Gasoline is non-durable good Price elasticity of that good is higher in the long run=> The demand for gasoline over weeks is less elastic than that over years 17 The demand for laptops over months is less elastic than that over years Laptop -> durable goods -> lower in long run -> higher in short run -> FALSE 18 If cross-price elasticity between good A and B is negative, an increase in price of good A will lead to a rightward shift in the demand curve of good B Ecomplements => Pa increase -> Db decrease -> leftward 19 If the income elasticity of demand for a bus ticket is -2, then it is an inferior good => TRUE Eid (% del I>0, % del Qd when I increase -> Qd decrease or when I decrease, Qd increase => exactly the def of Inferior good 20 If a percent increase in consumer’s income produces a percent decrease in the quantity demanded of good X, the coefficient of income elasticity of demand is negative and therefore,X is a normal good => when I increase -> Qd decrease => del I and % del Qd are in opposite in sign => Eid = % del Qd/ % del I < => when I increase, Qd decrease, when I decrease, Qd increase => inferior good 21 If percent increase in consumer’s income produces percent increase in the quantity demanded of good X, the coefficient of income elasticity of demand is positive and therefore, X is an inferior good Same above Q 22 Price elasticity of demand for good X is -0,8 Cross-price elasticity of demand between good X and Y is 1.5 If the price of good X and Y both rise by 10 percent, the quantity demanded of good X will increase by 23 percent Edp(X) =-0.8 Exy= 1.5 23 Price elasticity of demand for good X is -1,2 Cross-price elasticity of demand between good X and Y is 1.5 If the price of good X and Y both rise by 10 percent, the quantity demanded of good X will increase by percent 24 Two supply curves which go through the origin have the same price elasticity of supply at every quantity level 25 At the market equilibrium point, the absolute value of price elasticity of demand is always equal to price elasticity of supply Qd = Qs => (Qd)’ = (Qs)’ Pe=Ps=Pd, Qe=Qs=Qd => Esp = Esd 26 Per-unit tax imposed on the producer always makes that producer bears a larger part in total tax amount in comparison with the consumer's part => FALSE Suppose in this case 27 Per-unit tax imposed on the seller when the absolute value of price elasticity of demand is greater than that of supply will make buyers suffer a larger tax burden demand more elasticity -> flatter Supply -> steeper => Buyer suffer a larger tax burden 28 If demand is less elastic than supply, when the government imposes a tax per unit on sellers, buyers will suffer a larger tax burden => Illustrated in the 1st graph above 29 When the government imposes a tax per unit on producers and demand is perfectly inelastic, producers will suffer all the tax incidence => Consumers 30 Per-unit tax imposed on the producer of goods which demand is perfectly elastic will make consumer bear all the tax incidence HÌNH NHA 31 If supply is less elastic than demand, when the government imposes a tax of 5.000 VND/unit on producers, the market price will increase by 5.000 VND 32 If supply is more elastic than demand, when the government imposes a tax of 5.000 VND/unit on producers, the market price will increase by less than 2.500 VND S2=S1 + tax => P1Pi < tax 33 If demand is perfectly inelastic, when the government imposes a tax of 5$/unit on the seller, the market price will remain unchanged => CHANGE => EXACTLY = TAX 34 If demand is perfectly elastic, when the government imposes a tax per unit on sellers, the market price will increase by the same amount as tax => TRUE ... months is less elastic than that over years Laptop -> durable goods -> lower in long run -> higher in short run -> FALSE 18 If cross-price elasticity between good A and B is negative, an increase... the coefficient of income elasticity of demand is positive and therefore, X is an inferior good Same above Q 22 Price elasticity of demand for good X is -0 ,8 Cross-price elasticity of demand between... quantity demanded of good X will increase by 23 percent Edp(X) =-0 .8 Exy= 1.5 23 Price elasticity of demand for good X is -1 ,2 Cross-price elasticity of demand between good X and Y is 1.5 If the price