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QUESTION

# Consider the following graph: (4,4) 8,6 (8 6) (4. 4) DOC (2,3 (0 2) Quan:by 0,2 The price elasticity of supply is lowest at the following None are...

why the answer is not D? Their quantity are the same and the price at A is higher than B, PED equals change in Q/change in P.

2.At a price of \$5 competitive firm will be indifferent between existing the market or continuing to operate in the market. Assume that the firm is operating in the long run. Which of the following must also equals \$5?

a. the firm's MinAVC

b. the firm's MinATC

c. the firm's average marginal cost

d. Both a and b

e.none are correct.

The answer is D but I am confused about why min Avc can be the same as min ATC? I can only choose that B is correct.

I am not sure wt this question asked about, because in this 4 points it must have the lowest PES, which is point (8,6), but the answer is none are correct.

3.Research provided to the manager of a bus company suggests that if the company were to raise the price of bus tickets by 1%, then the number of tickets sold would decrease by approximately 4%. Then

a. the absolute value of price-elasticity of demand for its bus tickets is 4

b. the absolute value of price-elasticity of demand for its bus tickets is 0.25

c.the value of price-elasticity of demand for its bus tickets is -0.25

d.the value of price-elasticity of demand for its bus tickets is -4

e. Both A and D are correct.

The answer is A but I am not sure why D is not correct?

Why the maximum profit is not at 2 units of output? I think profit max is when MR=MC and when produce 2 units of output, MR=8 and MC=7.

The answer is A. But as the price is higher than ATC why it would exit in the long run?

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Consider the following graph:(4,4)8,6(8 6)(4. 4)DOC(2,3(0 2)Quan:by0,2The price elasticity of supplyis lowest at the followingNone are correct.point of the supply curve,
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