Question

USE TABLE 2 FOR QUESTIONS 24-30

PRICE PER UNIT	QUANTITY DEMANDED PER WEEK
$12.00	25
$11.50	30
$11.00	35
$10.50	40
$10.00	45
$9.50	49
$9.00	50
$8.50	52
$8.00	53
$7.50	54
$7.00	55

24. Using average values what is the price elasticity of demand when price rises from $7.50 to $8?

A) 3.45

B) 2.85

C) .70

D) .29

25. Using averages what is the price elasticity of demand when price changes from $8.50 to $9?

A) .69

B) .29

C) 1.22

D) 1.46

26) The price elasticity of demand is the most elastic at a price of

A) $9.00

B) $11.50

C) $7.00

D) $12.00

27. Using averages what is the price elasticity of demand when price changes from $10.00 to $10.50 and it becomes ______________ when price decreases?

A) 0.41, LARGER

B) 2.41, LARGER

C) 0.41, SMALLER

D) 2.41, SMALLER

28. Using averages what is the price elasticity of demand when price changes from $7.00 TO $7.50? What is the price elasticity of demand if all the quantities were multiplied by 10?

A) 3.76, 37.6

B) 0.27, 0.27

C) 3.76, 3.76

D) 0.27, 2.70

29. The price elasticity of demand at $7.50 is ____________ and at $11 it is ___________?

A) inelastic, elastic
B) elastic, unitary elastic
C) elastic; inelastic

D) elastic; elastic

30. As price decreases from $11 to $7 demand

A) becomes more inelastic

B) becomes more inelastic then becomes more elastic

C) becomes more elastic, until finally demand is unitary elastic
D) becomes more elastic

Answer 1

29.

Inelastic, Elastic

Reason: Elasticity increases as price increases

30.

Demand becomes more inelastic

Reason: Demand is inelastic at lower prices and elastic at higher prices