Question

If the supply curve is vertical, then supply is perfectly inelastic.

A) True

B) False

If a $5 decrease in the price of a good leads to a ten unit increase in quantity demanded, then demand must be elastic.

A) True

B) False

If the absolute value of the price elasticity of demand for peanuts is 2, then a 10 percent increase in the price of peanuts will lead to a 5 percent decrease in the quantity of peanuts demanded.

A) True

B) False

Answer 1

Q1
Answer
True
the supply curve is vertical at the fixed supply level so it is inelastic to the price change.
---------
Q2
Answer
false

the elasticity of demand =%change in quantity/%change in price
or
Elasticity of demand=(change in quantity/average quantity)/(change in price/average price)
by both the methods the proportional change is important not the absolute value, as the increase in absolute value may be less or more in proportion.

----------
Q3
answer
false

the elasticity of demand =%change in quantity/%change in price
=(-5)/10
=-0.5
=0.5 ( absolute value)
it is not 2.