Question

In each case below, what is the value of the price elasticity of demand? Is demand...

  1. In each case below, what is the value of the price elasticity of demand? Is demand perfectly inelastic, inelastic, unit elastic, elastic or perfectly elastic?
    1. Price falls by 10%, quantity demanded rises by 8%
    2. Price rises by 3%, quantity demanded falls by 3%
    3. Price rises by 1%, quantity demanded falls by 5%
    4. Price rises by 5%, quantity demanded collapses to zero
    5. Price falls by 2%, quantity demanded does not change

Homework Answers

Answer #1

The formula to calculate PED is:

Price elasticity of demand = % change in quantity demanded / % change is price

We know if:

PED > 1 , the demand is elastic.

PED < 1 , the demand is inelastic.

PED = 1 , the demand is unit elastic.

PED = 0 , the demand is perfectly inelastic

PED = infinity , the demand is perfectly elastic

a) PED = 8% / 10% = 0.8. Thus, demand is inelastic.

b) PED = 3% / 3% = 1. Thus, demand is unit elastic.

c) PED = 5% / 1% = 5. Thus, demand is elastic.

d) PED = demanded collapses to zero / 5% = Infinity. Thus, demand is perfectly ielastic

e) PED = 0% / 5% = 0. Thus, demand is perfectly inelastic

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Determine the price elasticity of demand, the cross-price elasticity of demand or the income elasticity in...
Determine the price elasticity of demand, the cross-price elasticity of demand or the income elasticity in the following scenarios. a. Consider the market for coffee. Suppose the price rises from $4 to $6 and quantity demanded falls from 120 to 80. What is price elasticity of demand? Is coffee elastic or inelastic? b. John’s income rises from $20,000 to $22,000 and the quantity of hamburger he buys each week falls from 2 pounds to 1 pound. What is his income...
1. What is the numerical value for the price elasticity of demand if a price change...
1. What is the numerical value for the price elasticity of demand if a price change causes no change in quantity demanded?________ What is the numerical value for elasticity of demand if a price change causes no change in total revenue?________ What is the elasticity of demand for a horizontal demand curve?________ What is the elasticity of demand if a price increase leads to an increase in total revenue? elastic / inelastic. What is the numerical value for the elasticity...
When the price is $2, quantity demanded is 10. When the price rises to $8, quantity...
When the price is $2, quantity demanded is 10. When the price rises to $8, quantity demanded falls to 2. What is the value of the elasticity of demand? Is it elastic or inelastic?
Taking the absolute value of the cross-price elasticity of demand is incorrect because it would: remove...
Taking the absolute value of the cross-price elasticity of demand is incorrect because it would: remove the ability to tell whether the two products have inelastic demand or elastic demand. 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 become zero. The percent change in insulin demanded for any price change is zero. The...
Categories of Price Elasticity of Demand For each of the following values for price elasticity of...
Categories of Price Elasticity of Demand For each of the following values for price elasticity of demand, indicate whether demand is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic. Also, indicate (increase, decrease, no effect) what would happen to total revenue if a firm raised the price in each elasticity range. Price Elasticity of Demand equals Descriptionn of Elasticity Total Revenue Change -2.5 -1.0 -0.8 -infinity 0
1)The price elasticity of demand for candles is __________ because as the price of candles rises...
1)The price elasticity of demand for candles is __________ because as the price of candles rises by 21%, the quantity demanded of candles falls by 14%. Group of answer choices a)inelastic b)none of the other three answers c)unitary elastic d)elastic 2) If the % change in the quantity demanded of bicycles is greater than the % change in the price of bicycles, then bicycles are __________ . Group of answer choices a)Inelastic b)Unitary elastic c)Elastic d)Infinitely elastic 4)All of the...
A life-saving medicine without any close substitutes will tend to have a small elasticity of demand....
A life-saving medicine without any close substitutes will tend to have a small elasticity of demand. a large elasticity of demand. a small elasticity of supply. a large elasticity of supply. The price of a good rises from $8 to $12, and the quantity demanded falls from 110 to 90 units. Calculated with the midpoint method, the price elasticity of demand is 1/5. 1/2. 2. 5. A linear, downward-sloping demand curve is inelastic unit elastic. elastic. inelastic at some points,...
1. If the price elasticity of demand for cigarettes is 0.55, and the price of cigarettes...
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...
What is perfectly elastic demand/supply? Draw a graph to represent perfectly elastic demand/supply. What is perfectly...
What is perfectly elastic demand/supply? Draw a graph to represent perfectly elastic demand/supply. What is perfectly inelastic demand/supply? Draw a graph to represent perfectly elastic demand/supply. When the price of t-shirts increases by 12 percent, the quantity of t-shirts demanded falls by 20 percent. Calculate the price elasticity of demand. Is the demand for t-shirts elastic, inelastic, or unit elastic? When the price of t-shirts falls by 30 percent, the quantity of t-shirts supplied decreases by 20 percent. Calculate the...
8. When the price increases by 30 percent and the quantity demanded drops by 30 percent,...
8. When the price increases by 30 percent and the quantity demanded drops by 30 percent, the price elasticity of demand is unitary elastic. elastic. perfectly inelastic. inelastic. perfectly inelastic. 9. If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5 percent, what is the percentage change in quantity demanded of Good B? -3 percent 1.50 percent 10 percent 3 percent -1.25 percent