In this paperwork of ECO 561 Week 6 Quiz (6 Correct Answers) you will find the answers on the next questions:

1. The demand curve is Qo= 100 – I OP and there Is a $1 price Increase, then the elasticity of demand at P = 2 Is

Hint Calculate the quantity demanded at P = 2 and P = 3. and then apply the elasticity formula.

-0.25

-0.5

-0.75

-1

2. If the absolute value of a demand elasticity is less than I, then

the demand Is inelastic, and a price rise will reduce the total revenue

the demand Is inelastic, and a price rise will increase the total revenue

the demand Is elastic, and a price rise will reduce the total revenue

the demand Is elastic, and a price rise will increase the total revenue

3. If the cross-price elasticity is negative, then the two goods are

unrelated

substitutes

complements

normal goods

4. Under perfect competition, a firm maximizes its profit by setting

P = MC because P = MR.

P above MC where MC = MR.

P = FC.

5. A good, real-work) example for perfect competition would be

lawyers

gas stations

Time Warner Cable

groceries stores

6. A firm under monopolistic competition will earn

a positive profit because it has some monopoly power

a zero profit because it sets P = MC

a zero profit because its P = ATC

a positive profit because it sets MC = MR