Question

what happens to the absolute value of the price elasticity of demand as you move up a demand curve

Answer #1

As we move up a linear demand curve the absolute value of the price elasticity increases. As we move up the demand curve the price will be higher and the quantity demanded will be lower. This would result in a higher absolute value of price elasticity when the demand curve is linear.

Example:

1) Firms are interested in the magnitude of the price elasticity
of demand coefficient. The magnitude of ?? determines whether the
demand for a good or service is elastic, inelastic or unit elastic.
For the following cases indicate whether demand is elastic,
inelastic or unit elastic. 1 < |??| < ∞ |??| = 1 0 < |??|
< 1 2)
2, What happens to the absolute value of the price elasticity of
demand as you move up a demand curve?

. What is the relationship between price elasticity and position
on the demand curve? For example, as you move up the demand curve
to higher prices and lower quantities, what happens to the measured
elasticity? How would you explain that?

As you move up along the demand curve, the price elasticity of
demand:
Select one:
a. Becomes more inelastic
b. Is unchanged
c. Becomes infinite
d. Becomes more elastic
e. Falls to zero

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...

If the absolute value of the price elasticity of demand for DVD
movies is 0.8 then the elasticity of demand of the DVD for the
movie Avengers: Endgame should be:
a) equal to 1 in absolute value.
b) less then 0.8 in absolute value.
c) greater than 0.8 in absolute value.
d) equal to zero because the DVD of this movie has been out for
several years.

3) Multipole choice: When you compare the absolute value of the
price elasticity of demand for most products [Hint, oil is one
product that works this way.] in the long run (20 years) vs.
absolute value of the elasticity of demand for the products in the
short run (6 months), the absolute value of the long run price
elasticity of demand is… [Note: we consider demand elasticity
positive, even though they’re technically negative. In other words,
for purposes of this...

Elasticity is related to a firm's total revenue and changes as
you move up and down the demand curve. Suppose you are a marketing
manager charged with deciding whether to increase the price of
goods. The company's goal in considering that decision is to
increase total revenue. If you were facing elastic demand, would a
price increase be a good way to increase total revenue? If you were
facing inelastic demand, would a price increase be a good way to...

Elasticity is related to a firm's total revenue and changes as
you move up and down the demand curve. Suppose you are a marketing
manager charged with deciding whether to increase the price of
goods. The company's goal in considering that decision is to
increase total revenue. If you were facing elastic demand, would a
price increase be a good way to increase total revenue? If you were
facing inelastic demand, would a price increase be a good way to...

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?

Suppose the (absolute value of) price elasticity of demand for
bouquets of flowers is 4.0. You are charging $8 per bouquet. If you
want to increase the quantity of bouquets you sell by 20 percent,
what price should you charge? (show all your work) [hint: it should
help to make use of the midpoint formula] (10 points)

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