Question

QUESTION 11 An advance in technology in the production of good X causes a. a leftward shift in the supply curve for good X. b. the supply curve for good X to change from vertical to upward sloping, c. the supply curve for good X to change from upward sloping to vertical. d. a rightward shift in the supply curve for good X.

Answer 1

11. Ans: a rightward shift in the supply curve of good X

Explanation:

Due to advancement in technology, the production and supply of good X will increase. So, the supply curve of good X will shift rightward.

13. Ans: choice ; opportunity cost

18. Ans: +1.26

Explanation:

Here, Y1 = 46,000     Q1 = 12

          Y2 = 52,000     Q2 = 14

Income elasticity of demand = (Q2 - Q1) / (Y2 - Y1) * (Y1 + Y2) / (Q1 + Q2)

                                             = (14 - 12) / (52,000 - 46,000) * (46,000 + 52,000) / (12 + 14)

                                             = (2 / 6,000) * (98,000 / 26)

                                             = 196,000 / 156,000

                                             = +1.26

Ans: fall ; elastic

Explanation:

If demand is elastic, a 1% increase in price lead to more than 1% decrease in quantity demanded. So, the price rise in price leads to decrease in quantity demanded.

Ans: equal to the percentage change in the quantity demanded of good Z.