Question

Which of the following goods has the characteristic of being excludable, but has the characteristic of non-rivalry in consumption? A) A non-congested highway with a toll. C) A lighthouse. ) A flu 1) Water. 2. For the diagram to the right, calculate the absolute value of price elasticity of demand over the price range from $15 to $25. A) 5 B) 0.2 C) 0.1667 D) 6 E) 1.5 F) 0.6667 G) 0.0267 H) 0.3 I) none of the above 3. Suppose the absolute value of price elasticity of demand for Good X is 1/3. This means a 1 percent increase in the price of X will cause a : A) 1 percent decrease in the quantity demanded for Good X. B) 3 percent increase in the quantity demanded for Good X. C) 3 percent decrease in the quantity demanded for Good X. D) 1/3 percent increase in the quantity demanded for Good X. i) 1/3 percent decrease in the quantity demanded tor vood X.

Answer 1

The goods that exhibit the characteristic of being excludable but have non-rivalry in consumption are non-congested highways with tolls.

1. The correct option is A.

2. The correct option is C.

3. The correct option is C.

Step-by-step explanation:

Non-congested highways with tolls are excludable because access can be restricted to those who pay the toll, making it possible to exclude non-payers. However, they are non-rivalrous as the consumption by one user does not diminish the availability or use of the highway by others. Unlike rivalrous goods, such as a flu vaccine, where one person's consumption reduces the quantity available for others, the use of a non-congested highway with tolls does not diminish its usability for other paying users.

In the case of the price elasticity of demand diagram, the absolute value is calculated by dividing the percentage change in quantity demanded by the percentage change in price. Without the specific numerical values or slope of the demand curve in the diagram, it is not possible to provide a precise numerical answer. However, the calculation involves determining the slope of the demand curve over the specified price range and applying the formula for price elasticity of demand.

Finally, if the absolute value of the price elasticity of demand for Good X is 1/3, it implies that a 1 percent increase in the price will result in a 1/3 percent decrease in the quantity demanded for Good X. The elasticity coefficient represents the percentage change in quantity demanded in response to a 1 percent change in price. Therefore, a 1/3 percent decrease in quantity demanded reflects the responsiveness of consumers to changes in price for Good X.

1. The correct option is A.

2. The correct option is C.

3. The correct option is C.