Answer to Question #198132 in Macroeconomics for Abdul basit

Question

2). Explain the features of Perfect Competition with examples.

3). Explain graphically, at what point the firm should stop hiring worker in a perfect competitive market Also, list down some of the characteristics of the market form.

4). Demand of a product is usually very sensitive to economic variables, such as the prices and consumer income. This responsiveness of demand is Compute elasticity in the below scenarios:

a). Yesterday, the price of envelopes was $3 a box, and Jacky was willing to buy 10 boxes. Today, the price has gone up to $3.75 a box, and Jacky is now willing to buy 8 boxes. Is Jacky’s demand for envelopes elastic or inelastic? What is Jacky’s elasticity of demand?

b). Katy advertises to sell cookies for $4 a dozen. She sells 50 dozen and decides that she can charge more. She raises the price to $6 a dozen and sells 40 dozen. What is the elasticity of demand? Assuming that the elasticity of demand is constant, how many would she sell if the price were $10 a box?

Answer 1

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