Question Three: CORRECT THE UNDERLINED PART. 1. If each 15 percent increase in the price of TVs increases by 4 percent the quantity supplied, the price elasticity of supply for TVs is equal to 4. 2. The monthly rent for the warehouse is the main total cost in any firm. 3. Aconsumer buys 50 units of chocolate when the price is E1.50. The amount purchased increased to 90 units when the price is reduced to E1.25. According to this case, the price elasticity of demand would be 4. 4. The steeper the supply curve, the better it is. 5. If Marietta College theatre department increases ticket prices for its performances and we observe that total ticket revenue decreases, we can conclude that performances are unitary elastic as the elasticity must have been equal 1. 6. In a perfectly competitive market, the government determines the prices at which goods are sold. 7. When the price of milk rose 50% the quantity of milk sold fell 25% and the sale of breakfast cereal also fell 25% This set of facts indicates that the milk and the breakfast cereals are substitutes. 8. If Qd = 40 -6 P and Qs = 30 + 2P, the equilibrium price is 3 and the equilibrium quantity is 20