The Questions Macroeconomics / Microeconomics - 1458 Words

Principles of Macroeconomics / Microeconomics Your Name:___Yurui Yao_____________________ Instructor: Jim Borer, MBA Homework Assignment #3 due by 11:59 PM on February 7 (100 points) Part 1: Answer the following multiple choice (MC) questions (you may highlight, bold, or enter a letter in the blank – 2 points each): 1. __D____ If the price of a sub sandwich increases by 2% and the quantity demanded falls by 5%, then there will be a. an increase in the price elasticity of demand. b. an increase in the price elasticity of supply . c. a shift in the demand curve. d. a decrease in revenue. 2.___A___If an increase in the price of a good leads to no change in the quantity demanded, then the demand for the good is a. perfectly†¦show more content†¦d. both a and b. 15. ___C____ Cross-elasticity of demand a. will be positive for substitutes like cabbage and lettuce when the price of cabbage goes up. b. will be negative for complements like SUVs and gasoline when the price of gasoline goes up c. both a and b d. none of the above. Part 2: Answer the following questions (insert your answers directly below each question): 1. How does tax revenue generated on a product with inelastic demand compared to the tax revenue generated on a product with elastic demand? Why the difference? (page 86) (10 points) A tax imposed on a good that has an inelastic demand will generate more tax revenue than a tax on a good with elastic demand, assuming similar supply conditions. If the goods demand is more elastic, that means its demand is more sensitive to a price increase. There, the price increase due to the tax will cause quantity purchased and tax revenue to be less than the revenue on a product with inelastic demand. 2. What is the relationship between elasticity or inelasticity of demand and who bears the most burden (customer or business) of a tax on various products/services (see pages 84 and 85). (10 points) The more inelastic the demand relative to supply, the more tax burden the customer will bear. For gas, in the short term, customer will cut back somewhat, but they still need gas (inelastic demand), so they will bear most of the expense. If demand were elastic, they could walkShow MoreRelatedMicroeconomics/Macroeconomics Chapter 1 Questions and Answers5717 Words   |  23 Pagesrational decision maker changes the status quo if the expected marginal benefit is greater than the expected marginal cost. Use PowerPoint slides 20-21 for the following section Microeconomics and Macroeconomics †¢ Microeconomics: The study of individual economic choices (e.g., your economic behavior). †¢ Macroeconomics: The study of the performance of the economy as a whole, as measured, for example, by total production and employment. †¢ Economic fluctuations: The rise and fall of economic activityRead MoreEconomics Affects Our Daily Life1576 Words   |  7 Pagesdemand and supply analysis, consumption, distribution, market structure etc. Question 1 Economics can be classified into two main branches, which are macroeconomics and microeconomics. Macroeconomics refers to study of economic aggregates (aggregate demand, aggregate supply etc.) while Microeconomics refers to study of behavior and performance of individual parts of economy such as firm or household. 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The difference between macro and microeconomics A decentRead MoreApplying Supply and Demand Concepts1027 Words   |  5 Pagesa series of questions that will be answered and the topic of this paper will cover different concepts of micro and macroeconomics including; shifts in the supply and demand curves and its effect on the equilibrium price, quantity, and decision making. I will explain my understanding and applications of these concepts to my workplace. Finally, it will cover how the price elasticity of demand affects a consumer’s purchasing and the firm’s pricing strategy Identify two microeconomics and two macroeconomicsRead MoreSupply and Demand719 Words   |  3 Pages Microeconomics is â€Å"the analysis of the decisions made by individuals and groups, the factors that affect those decisions, and how those decisions effect others.† Microeconomic decisions by both firms and individuals are motivated by cost and benefit considerations. 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