Question

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 question, “greater” means farther away from zero.] a) less than that of the short run. In the long run, this elasticity will always be very close to zero. b) not zero, but less than that of the short run. c) equal to that of the short run. d) greater than that of the short run.

Answer #1

**Option D is
correct.**

- Elastcity of demand measures the percentage change in quantity demanded due to percentage change in price.
- The value of absolute elasticity in the long run will be always greater than that of short-run.
- It is so because in the long run, demand is relatively more elastic.
- People have more time in the long run to switch to something else or to find the substitutes.
- Therefore, a small percentage change in the price changes the demand drastically in the long run as compared to the short run.

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.

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...

Suppose the price elasticity of demand for heating oil is 0.1 in
the short run and 0.9 in the long run.
If the price of heating oil rises from $1.90 to $2.10 per
gallon, the quantity of heating oil demanded will (fall,
rise???) by ???% in the short run and by
???% in the long run.
The change is (smaller, larger???) in the long
run because people can respond (more, less???)
easily to the change in the price of heating...

The price elasticity of demand uses the absolute value because
it is sometimes negative or always negative
.The income and cross elasticities of demand do not use the
absolute value because they can be negative only, positive
only or positive or negative
The income elasticity of demand is positive for a normal
or inferior good and negative for an inferior or
normal good.
The cross-price elasticity of demand is positive for
complementary or substitute goods and negative for
complementary or...

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

suppose the price of elasticity for heating oil is 0.1 in the short
run and 0.9 in the long run.
if the price od heating oil rises from $1.90 to $2.10 per
gallon, the quantity of heating oil demand will (fall, rise) by
_____% in the short run and by _____% in the long run. the change
is (larger,smaller) in the long run because people can respond
(more, less) easily to thr change in the price of heating
oil.

2. Price elasticity of demand would be larger /
smaller for a necessity than for a luxury. Elasticity of
demand would be larger / smaller in the short run
than in the long run. Elasticity of demand increases/
decreases when substitutes become available. Elasticity of
demand would be larger / smaller for table salt
than for paper towels.

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,...

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?

Define the following:
Law of demand
Normal Good
Inferior Good
Absolute Price
Relative Price
Utility
Production Function
Law of Diminishing Marginal Utility
Cross Elasticity of Demand
Income Elasticity of Demand
Bond
Stock
Marginal Revenue Product
Marginal Physical Product
Sunken cost
Short Run
Long Run
Implicit Cost
Explicit Cost
Increasing Returns to Scale
Decreasing Returns to Scale
Constant Returns to Scale
Giffin Good

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