For Questions 3 and 4, consider the market illustrated below. Demand for this good is linear. Recognize that the slope
of this demand curve is equal to $\frac{-1}{3,500}$.
price
16.00-
0
0
Demand
quantity
56,000
3.
At a price of $11.30, quantity demanded is 16,450 units. Consequently, the value of price elasticity of demand is
A. approximately -0.416.
B. approximately -1.988.
C. approximately -2.404.
D. -4.7.
4.
If an increase in supply led to a decrease in price from $5.36 to $4.87, total consumer expenditures on this good
would
A. increase.
B. decrease.
C. remain constant (i.e., not change).
D. None of the above answers are necessarily correct, since the graph does not convey enough information to
determine how total consumer expenditures would change for this decrease in price.