Question

**9) Suppose you know that the price elasticity of demand
is -2 (2 in absolute value), and you know that the price of a
product increased from $20 in 2019 to $24 in 2020. What are
possible values for the quantity demanded in 2019 and
2020?**

Answer #1

Price elasticity of demand = %change in demand/ % change in price

So, % change in price = (24-20)/20 *100 = 20%

%change in demand = ealsticity * %change in price

% Change in demand = -2*20 = -40%

Now, let q2 for quantity in 2020 and q1 for quantity in 2019

(q2-q1)/q1 = -0.4

q2-q1 = -0.4q1

q2 = 0.6q1

Since quantity cannot be negative and in fraction. So q1 must be a multiple of 5.

Therefore combination can be (5,3) ; (10,6) ; (15,9) ; (20,12)

And q2 will be a multiple of 3.

Suppose the (absolute value of) price elasticity of demand for
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3) Multipole choice: When you compare the absolute value of the
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for purposes of this...

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Increase by 9%
Increase by 36%
Decrease by 9%
Decrease by 13%
Decrease by 36%
2. Suppose we know that the income elasticity of demand for
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True...

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demand is incorrect because it would:
remove the ability to tell whether the two products have
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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
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elasticity of demand or the income elasticity in the following
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