Question

1) Does it make sense for a non-profit entity like a museum to calculate the price, income and cross-price elasticity figures for the services they provide?

Multiple Choice

A No – since they are non-profit they get a pass on doing these calculations.

B No – non-profits are immune from the laws of microeconomics

C Yes – for-profit, non-profits and even the government should calculate these elasticities.

D None of the responses above are correct.   

2)Why are electricity prices for consumers often inelastic in the short-run, but more elastic in the long-run?

Multiple Choice

A ​​In the short-run consumers don’t really have any choice they must buy from the power company.

B In the long-run, consumer can either conserve power or find alternatives like solar power, or maybe even other smaller local power companies.

C Better technology for ovens, refrigerators, washing machines and even computer software that tracks power usage can give consumers more ways to save money.   

D All responses above are correct.

3) If the Price Elasticity of Supply is 2.5, then what does this mean?   

Multiple Choice

A Producers are not responsive to the market price.

B Producers are responsive to the market price.

C Producers can’t do anything after the figure goes above 2.

D None of the responses above are correct.   

Answer 1

a) "C"

All the types of firms in the market should calculate all these stuffs because it just doesn't help them with profit but also price setting and knowing the competition of the goods.

b) "D"

All the given options explain why the elasticity is low in the short run and high in the long run for electricity.

c) "B"

it means that the producers are responsive to the market price. The answer is "B".