Question

**1) Compare the price elasticity of demand for the two
products. Which of these is more elastic and very brief explain why
(i.e., which product are buyers more likely to be price
sensitive)?**

i) Diesel fuel for vehicles in the next six months or diesel fuel for vehicles five years into the future?

iii) Demand for milk sold in a town’s convenience store at 2 AM vs. demand for milk sold by a town’s convenience store at 2 PM? (Hint: assume all grocery stores in this town are closed at 2 AM)

Answer #1

1) In short run good are less elastic and in long run they become more elastic because in long run more substitutes become available and technological development in long run causes less dependence on diesel fuel which makes it more elastic . So, Diesel fuel for vehicles in the next six months : inelastic . diesel fuel for vehicles five years into the future : elastic .

2) Demand for milk sold in a town’s convenience store at 2 AM : Inelastic . Demand for milk sold by a town’s convenience store at 2 PM : Elastic .

At 2 am , when all other groceries are closed , people will have no other option but to buy milk from this store only and also milk is an essential commodity . But at 2 pm , there are many shops open selling identical packets of milk so it becomes more price elastic for the convenience store due to increase in supply .

1. Consider the market for ice-cream. Compare the price
elasticity demand for ice cream in
(i) Winter vs (ii) Summer.
Show your answers in two graphs.
2. For the market for oranges, when price rises from $4 to $5,
quantity demanded drops from 8 to 7.
(a) Calculate the price elasticity of demand.
(b) Is the demand for oranges elastic?

1.
The Price Elasticity of Demand for a good is −0.78. Which of the
following describes the Price Elasticity of Demand?
Group of answer choices
Elastic
Inelastic
Unit elastic
Perfectly elastic
2.
The Price Elasticity of Demand for a good is −1.11. Which of the
following describes the Price Elasticity of Demand?
Group of answer choices
Elastic
Inelastic
Unit elastic
Perfectly elastic

1. If the price elasticity of demand for cigarettes is 0.55, and
the price of cigarettes increases by 10 percent, then the quantity
of cigarettes demanded will fall by what percent?
2. If the price elasticity of demand for chicken is 2, then a
20% decrease in the price of chicken will lead to what percentage
increase in the quantity demanded of chicken?
3. When the price of NBA tickets is $25 each, 30,000 tickets are
sold. After the price...

Q16 - If the price elasticity of demand is 1,
demand is
1. Upward sloping.
2. Inelastic
3. Unitary elastic.
Q17 - When wages increase the income effect of
labor supply ________ the quantity of labor supplied because
________.
1. Reduces; the price of leisure has increased.
2. Reduces; workers acquire more of all normal goods when income
increases.
3. Increases; the value of working has increased.
4. Increases; the price of leisure has increased.
4. Elastic.

1. When the price of a given type of hamster chow increased by
25%, 25% more units were produced and sold. Calculate the
appropriate elasticity. You will interpret this answer in the next
question.Enter only numbers, a decimal point, and/or a negative
sign as needed. Round all intermediate steps to four decimal places
and your final answer to two decimal places.
2.
The previous question was describing
Group of answer choices
relatively elastic price elasticity of supply
unit elastic price...

1-As we move up the demand curve, the price elasticity of demand
* A) increases B) decreases C) becomes unitary D) does not
change
2-If the price of lemonade increases relative to the price of
grape juice, the demand for: * A) grape juice will decrease. B)
grape juice will increase. C) lemonade will decrease. D) lemonade
will increase.
3-An increase in price will result in no change in total revenue
if: * A) the percentage change in price is...

1. The price elasticity of demand for iphone 6 is 1.2. Apple
wants to increase its total revenue. Would you recommend that Apple
raise or lower the price of iphone 6? Explain your answer.
2. The demand of gasoline is more inelastic in the short run
than in the long run. Why? Give examples that illustrate why the
demand of gasoline in the long run is not inelastic.
3. Choose one of the products or services that your company
provides,...

Question 1
The following is the MOST PRECISE definition of
the Own Price Elasticity of Demand:
Question 1 options:
A. Is the measure of how sensitive is the consumer to change in
prices.
B. It measures the slope of the demand curve.
C It measures the percentage change in quantity demanded of good
x as a result of a percentage change in price per unit of good
x.
D. It measures the total change in quantity demanded of good x...

a. What are the major determinants of price elasticity of
demand? Instructions: You may select more than one answer. Click
the box with a check mark for correct answers and click to empty
the box for the wrong answers. Substitutability checked Proportion
of income unanswered Luxuries versus necessities unanswered Time
unanswered Excise taxes unanswered Availability of complementary
goods unanswered Inferior goods and normal goods unanswered b. Use
those determinants and your own reasoning in judging whether demand
for each of...

Week 2 HW: Elasticity
Step 1 - E L A S T I C or INELASTIC?
Price Elasticity of Demand is a measure of how responsive demand
is to a change in price. If a price change leads to a considerably
bigger change in quantity demanded, we would consider the good to
be responsive to a price change—hence elastic. If,
however, a similar price change leads to a much smaller change in
demand, we would consider it inelastic.
To get...

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