What happens to consumer surplus when price level falls

Reference no: EM132180695

Questions -

Question 1. (Categories of Price elasticity of Demand) For each of the following absolute values of price elasticity of demand, indicate whether demand is elastic, inelastic, perfectly elastic, perfectly inelastic or unit elastic. In addition, determine what would happen to total revenue if a firm raised its price in each elasticity range identified;

a. ED=2.5

b. ED=0.8

Question 2. (Price elasticity of supply) Calculate price elasticity of supply of each of the following combinations of price and quantity supplied. In each case determine whether supply is elastic, inelastic, perfectly elastic, perfectly inelastic or unit elastic.

Question 3. Consider the following pairs of goods. Which one would you expect to have more elastic demand? Why?

Question 4. Outsourcing inpatient care to India

How does the concept of elasticity of demand relate to this topic?

Question 5. During the 1980s, the US Congress imposed a high sales tax on yachts, figuring that the rich could afford to pay for this luxury. But so many jobs were lost in the boat building industry that the measure was finally repealed. What did congress get wrong in imposing this tax? Briefly discuss.

Question 6. Why is the price elasticity for demand of Coca-Cola greater than price elasticity demand for other soft drinks generally? Briefly discuss

Question 7. (Law of diminishing marginal utility) Some restaurants offer "all you can eat" meals. How is the practice related to diminishing marginal utility? What restrictions must the restaurant impose on the customer in order to make profit?

Question 8. (Marginal utility) Is it possible for marginal utility to be negative while total utility is positive? If yes, under what circumstances is it possible?

Question 9. (Role of time in demand) In many amusement parks, you pay an admission fee to the park but you do not need to pay for individual rides. How do people choose which rides to go on?

Question 10. What is the diamonds-water paradox, how is it explained? Use the same reasoning to explain why bottled water costs so much more than tap water.

Question 11. What is consumer surplus? What happens to consumer surplus when price level falls?

Reference no: EM132180695

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