Question

What does it mean if I tell you that the price elasticity of demand of apples is 3.2, while the price elasticity of demand of apple juice is 1.5? In your answer, be sure to explain what elasticity is and whether you consider these products to be elastic or inelastic. Finally, suggest reasons why these elasticities might make sense. Are there complements? Substitutes? Explain.

Answer #1

Price elasticity tells how much the quantity demanded will be affected with a given change in price of that good.

Price elasticity of demand of Apples is 3,2 which implies that 1 % change in price would lead to 3.2% change in apples demanded. Whereas, that equal to 1.5 would imply 1% change in price would lead to 1.5% change in apples.

both the product's elasticity is greater than 1 which implies both are elastic. But, comparatively, demand for apples is more elastic than that of Apple Juice. That probably is the case because higher number of substitutes are available for Apples.

Taking the absolute value of the cross-price elasticity of
demand is incorrect because it would:
remove the ability to tell whether the two products have
inelastic demand or elastic demand.
cause the value of the cross-price elasticity of demand to
become smaller.
remove the ability to tell whether the two products are
substitutes or complements.
cause the value of the cross-price elasticity of demand to
become zero.
The percent change in insulin demanded for any price change is
zero. The...

What are the determinants of price elasticity of demand?
Using your list , determine whether demand for each of the
following products is elastic, unit elastic or inelastic.
Bottle of water
Insulin (used to regulate blood sugar of diabetic
individuals)
Gasoline
Ketchup
Make sure to explain your reasoning as you decide whether the
demand for each of these products is elastic, inelastic or unit
elastic.

Determine the price elasticity of demand, the cross-price
elasticity of demand or the income elasticity in the following
scenarios.
a. Consider the market for coffee. Suppose the price rises from
$4 to $6 and quantity demanded falls from 120 to 80. What is price
elasticity of demand? Is coffee elastic or inelastic?
b. John’s income rises from $20,000 to $22,000 and the quantity
of hamburger he buys each week falls from 2 pounds to 1 pound. What
is his income...

Price Elasticity of Demand for good X: −0.34
Income Elasticity of Demand for good X: 0.56
Cross Price Elasticity of Demand for goods X and Y: 0.04
Given the information above, determine the following:
1. whether good X is elastic, unit elastic, or inelastic
2. whether good X follows the “law” of demand
3. whether good X is normal or inferior
4. whether good X is a luxury or a necessity
5. whether good X and good Y are complements,...

What do you think happened with the elasticity of demand for
Apple EarPods (headphones with cable), when the Airpods
appeared?
(a) It became more elastic, because they are complements
(b) It became less elastic, because they are substitutes
(c) It became more elastic, because they are substitutes
(d) It became less elastic, because they are complements

USING the determinants of price elasticity of demand, discuss
whether you think the price elasticity of demand for cherries are
to be inelastic or elastic?

What is price elasticity of demand?
What determines whether a product’s demand is elastic, inelastic,
unitary elastic, perfectly elastic and perfectly inelastic? What is
mid-point formula to determine the elasticity of demand and why is
it important to use it instead of the general formula for
elasticity? Carefully explain.

Fill in the blanks: From the sign of the price elasticity of
demand we can tell whether the goods are _____________ and from the
absolute value of the price elasticity of demand we can tell
whether goods are _________________________.
Elastic, ordinary
Ordinary, elastic
Elastic, normal
Normal, elastic

Drawing on the influences (determinants) of price elasticity of
demand, explaining whether the demand for petrol in Australia is
elastic or inelastic. Illustrate the effect of price drop on the
total revenue of a petrol station.
Part 1: explain whether demand for petrol is elastic or
inelastic by exploring the determinants of price elasticity of
demand.
Part 2: explain and illustrate the impact of price rise on total
revenue of a petrol station. You may draw a graph.

1.If price rises by 20% and quantity demanded of rice falls by
100 pounds, the elasticity of demand is : (1 point)
a. greater than 1
b. equal to -5
c. equal to -20
d. cannot be determined without additional information.
2.If quantity supplied responds only slightly to a change in
price, then: (1 point)
a. Supply is elastic
b. An increase in price will shift the supply curve to a large
extent
c. Supply is inelastic
d. Supply is...

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