Topics in Demand and Supply Analysis

Which of the following type of goods is most likely to have the highest own-price elasticity of demand to the middle-income?

The demand curve for luxury mattresses is P=12000-20Q.

The own-price elasticity of demand for luxury mattresses at a price point of $8000 is:

A low-income household’s weekly demand for potatoes is:
Q = 12 – 0.1P(own) + 0.04P(rice) + 0.0007I

If the price of potatoes is $2, price of rice is $1, and household income is $3000, what is the cross-price elasticity of demand for potatoes with respect to the price of rice?

The income elasticity of demand for a good is negative. This most likely mean that the good is a/an:

Substitution and Income Effects

In the case of an inferior good with a decrease in own price, which of the following statements is most likely true?

Substitution and Income Effects

For a Veblen good, the demand curve (against own price) is most likely:

Marginal Returns and Productivity

A caterer recently hired more cooks to cope with increasing demand. In the short run, marginal returns are MOST likely to increase if:

Marginal Returns and Productivity

When marginal product is decreasing but still positive, which of the following is NOT true?

Breakeven and Shutdown Analysis

A bakery has an average fixed cost per bun of $1 and average variable cost of $1.60 at current production levels. Based on this information, the bakery needs to be able to sell each bun AT LEAST $________ to continue operating in the SHORT RUN.

Economies and Diseconomies of Scale

After expanding capacity, a manufacturing firm finds that the average total cost of production has gone up. What is the most appropriate action for the firm to ensure long-term viability? (Assume the firm operates in a perfectly competitive industry)