Question

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?

Answer #1

Elasticity is defined as the response of a good for a change in price. If the elasticity value is greater than 1 (absolute term) then it is called as elastic and if it is less than 1 (absolute term) then it is called as inelastic

So, it is calculated as percentage in Quantity demanded to percentage change in Price

Ed = ((Q2-Q1)/Q1)/ ((P2-P1)/P1) = ((2-10)/10)/((8-2)/2) = -80%/300% = -0.27

As the value of the elasticity is less than 1 in terms of absolute value the elasticity of demand is said to be inelastic

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

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?
Price falls by 10%, quantity demanded rises by 8%
Price rises by 3%, quantity demanded falls by 3%
Price rises by 1%, quantity demanded falls by 5%
Price rises by 5%, quantity demanded collapses to zero
Price falls by 2%, quantity demanded does not change

Suppose that when the price of water rises by 30 percent, the
quantity demanded falls by 10 percent. The price elasticity of
demand for water is ____________, making water an _______________
good (in this example).

When the price of doodads falls from $16 to $10 the quantity of
doodads demanded rises from 150 to 160 units.
a) Compute and categorize the elasticity of demand of
doodads.
b) Interpret the number you calculated in part (a) for the
elasticity of demand for doodads.
c) If the government placed an excise tax on doodads, who would
pay the majority of that tax: consumers or firms? Explain verbally
(no graph required).

Price Quantity Demanded $0 50 $2 40 $4 30 $6 20 $8 10 a. Using
the midpoint method, calculate the price elasticity of demand
between $4 and $6? b. Between two quantities of 30 to 20, is demand
elastic, inelastic, or unit elastic? Show the work.

Fill in the blanks:
When demand is inelastic, a decrease in price causes
quantity demanded to ________and total revenue to ________.
If price rises and total revenue rises, demand must be
________.
When demand is elastic, an increase in price causes quantity
demanded to ________and total revenue to ________.
If price rises and total revenue stays the same, demand must be
________ elastic.

16. At a price of $4, quantity demanded is 100; and at a price
of $6, quantity demanded is 120. Using the midpoint formula, the
price elasticity of demand is ________ and demand is ________.
A) 0.1; inelastic
B) 0.45; inelastic
C) -2.2; elastic
D) -10; elastic

1. When elasticity of demand is equal to one and the change in
the quantity demanded and the change in price are exactly
proportional. This type of elasticity is described as ________.
A. elastic
B. inelastic
C. unitary elastic
2. What happens to total revenue (TR) if the price rises on a
product with demand that is price elastic?
A. Total revenue will rise.
B. Total revenue will remain the same.
C. Total revenue will fall.

A measure of the rate of percentage change of quantity demanded
with respect to price, holding all other determinants of demand
constant is
a.
Income elasticity of demand
b.
Own price elasticity of demand
c.
Price elasticity of market equilibrium
d.
Cross price elasticity of demand
The value of the income elasticity of demand coefficient for
Good X is given as 0.1. This means that
a.
as income increases by 10 percent, quantity demanded rises by 1
percent.
b.
as income...

1.If price rises by 20% and quantity demanded of rice falls by
100 pounds, the elasticity of demand is : (1 point)
a. greater than 1
b. equal to -5
c. equal to -20
d. cannot be determined without additional information.
2.If quantity supplied responds only slightly to a change in
price, then: (1 point)
a. Supply is elastic
b. An increase in price will shift the supply curve to a large
extent
c. Supply is inelastic
d. Supply is...

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