Question

10.There are a lot of substitutes for bologna. For this reason, we can infer that the demand for bologna is elastic.T/F

Suppose a study determines that Ed for good X is .78 and the Ed is .54 for good Y.

11.1.  

Both goods have a demand that is elastic.T/F

Suppose a study determines that Ed for good X is .78 and the Ed is .54 for good Y.

11.2.  

Consumers are more price sensitive to changes in price of good Y than they are for good X. T/F

Suppose a study determines that Ed for good X is .78 and the Ed is .54 for good Y.

11.3.  

If the price of good Y falls by 10%, then we know that Quantity will increase by 5.4%.T/F

Suppose a study determines that Ed for good X is .78 and the Ed is .54 for good Y.

	11.4.	For good X: If price increases by 5%, we know that quantity will decrease by 2.7%. T/F

Answer 1

Q10
Ture
The good with more substitute have elastic demand because the consumer can substitute consumption as price changes.

Q11.1
False
Both goods have inelastic demand because the elasticity is below 1.
Q11.2
False
The elasticity is higher for good x and good y so the consumer is more sensitive to the price change in good x than good y because elasticity is the measure of the sensitivity of quantity because of change in price.
Q11.3
True
%Change in quantity=%change in price*elasticity
=10*0.54
=5.4%

Q11.4
false
%Quantity change=%change in price*elasticiyt
=5*0.78
=3.9
The quantity falls by 3.9%