Consider the market for loquats. Here is some information about loquats that you
ID: 1092144 • Letter: C
Question
Consider the market for loquats. Here is some information about loquats that you might find useful:
The elasticity of demand for loquats is -0.5
The income elasticity of demand for loquats is +1.0.
The cross price elasticity of demand between loquats and kumquats is +0.8.
The cross-price elasticity of demand between loquats and widgets is -1.2.
Loquats are produced using land, labor, and fertilizer as inputs.
The price of widgets rises. The impact on equilibrium quantity (Q) of loquats and loquat supplier revenue (R) is:
Q up, R up
Q down, R down
Q up, R down
Q down, R changes in an uncertain direction
None of the above
4 points
QUESTION 2
Consider the market for loquats. Here is some information about loquats that you might find useful:
The elasticity of demand for loquats is -0.5
The income elasticity of demand for loquats is +1.0.
The cross price elasticity of demand between loquats and kumquats is +0.8.
The cross-price elasticity of demand between loquats and widgets is -1.2.
Loquats are produced using land, labor, and fertilizer as inputs.
The price of kumquats rises and the price of land falls simultaneously. The impact on equilibrium price (P) and quantity (Q) of loquats is:
P and Q both change in uncertain directions
P changes in an uncertain direction, Q down
P changes in an uncertain direction, Q up
P down, Q changes in an uncertain direction
P up, Q changes in an uncertain direction
A.Q up, R up
B.Q down, R down
C.Q up, R down
D.Q down, R changes in an uncertain direction
E.None of the above
Explanation / Answer
1
Q down, R changes in an uncertain direction
2
P and Q both change in uncertain directions
Q down, R changes in an uncertain direction