Question

1-The price elasticity of demand for furniture is estimated at 1.3. This value means a one percent increase in the

A.price of furniture will decrease the quantity of furniture demanded by 1.3 percent.

B.price of furniture will increase the quantity of furniture demanded by 1.3 percent.

C.quantity of furniture demanded will decrease the price of furniture by 1.3 percent.

D.quantity of furniture demanded will increase the price of furniture by 1.3 percent.

2.An advance in technology lowers the price of a laptop.

If the demand for laptops is price​ inelastic, the quantity of laptops sold will​ ______ and total revenue will​ ______.

A.​decrease; rise

B.​increase; rise

C.​decrease; fall

D.​increase; fall

Answer 1

Q1
Answer
Option A
Elasticity = % change in quantity /% change in price
-1.3=% change in quantity /1
% change in quantity =-1.3*1=-1.3%
the minus sign is used to denote demand elasticity in the calculation and also the minus sign for % change denote a decrease in the quantity.
so 1% increase in price decreases quantity by 1.3%
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Q2
Answer
Option D
increase; Fall

the advance in technology increases supply and shifts the supply curve to the right which decreases price and increases the quantity
The old price was inelastic and decrease in price make the demand more inelastic so but the revenue is maximum at unit elastic demand and decrease in price reduces revenue because the combination of price and quantity goes away from the point of unit elastic demand ( revenue maximum demand) like it because more inelastic.