Question

A price change causes the quantity demanded for a good to increase by 20 percent and the total revenue of that good decreases by 15 percent. What can you say about the price elasticity of demand at this point.

It's elastic |
||

It's inelastic |
||

It's unitary elastic |
||

It's perfectly elastic |

Answer #1

Formula :

(i) TR(Total revenue) = P*Q, where P = price and Q = quantity

(ii) % change in (A*B) = % change in A + % change in B

Thus, % change in TR = % change in (P*Q) = % change in P + % change in Q

=> -15% = % change in P + 20% (Negative sign means that revenue decreases)

=> % change in P = -20% - 15% = -35%

Thua % change in Price = -30% (negative means that Price decreases)

Price elasticity of demand = % change in Quantity / % change in
P = 20/(-35) **= -0.57**

Thus absilue value of price elasticity is lesser than 1. Hence Demand is inelastic

Hence, the correct answer is **(b) It's
inelastic.**

A price change causes the quantity demanded of a good to
increase by 20 percent, while the total revenue of that good
increases by 15 percent. Is the demand curve elastic or inelastic?
Explain.

A price change causes the quantity demanded of a good to
increase by 2 percent, while the total revenue of that good
decreased by 8 percent. Over this price range is the demand for
this good elastic, inelastic or unitary elastic? Could anyone
explain, please?

CLASS: Elastic or Inelastic?
A price change causes the quantity demanded of a good to drop by
20 percent, yet total revenue still increases by 10 percent. Is
demand elastic or inelastic? How can you tell?

When the price of good "X" increases 20 percent (+20%), Harry
decreases his quantity demanded of "X" by 25 percent while Meghan
decreases her quantity demanded of "X" by 15 percent. Harry's
demand for good "X" is (relatively inelastic / unitary elastic /
relatively elastic) and Meghan's demand for good "X" is (relatively
inelastic / unitary elastic / relatively elastic).
A. Relatively inelastic; relatively
inelastic.
B. Relatively inelastic; relatively
elastic.
C. Unitary elastic; relatively
elastic.
D. Relatively elastic; relatively
elastic.

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

A price change causes the quantity demanded of a good to
increase by 15%, while the total revenue of that good increases by
10%.
True or False: The demand curve is elastic in this region.
True
False

4. Problems and Applications Q4
A price change causes the quantity demanded of a good to
increase by 12%, while the total revenue of that good decreases by
16%.
True or False: The demand curve is elastic in this region.
True
False

QUESTION 21
If the percentage change in quantity demanded is greater than
the percentage change in price for good A, then the demand for good
A is
a.
inelastic.
b.
unit elastic.
c.
elastic.
d.
perfectly inelastic.
QUESTION 22
If the percentage change in quantity demanded is less than the
percentage change in price for good B, then the demand for good B
is
a.
inelastic.
b.
unit elastic.
c.
elastic.
d.
perfectly elastic.
QUESTION 23
If the percentage change...

3.
At the price of $20, the quantity demand of lawn hoses was 100.
The price increased to $25, and the quantity demanded dropped to
95.
[ The two points on the demand curve are Point A: (100, $20) and
Point B (95, $25).]
a) Calculate the price elasticity of
demand for the hoses. ____________
b) Is it elastic, inelastic or unitary
elastic? _____________
What happens to the total revenue in this
case?_______________
What would happen to the total revenue...

In Market A, a 4 percent increase in price reduces the quantity
demanded by 2 percent. In Market B, a 3 percent increase in price
reduces the quantity demanded by 4 percent. The demand in Market A
and Market B are considered______ and _______, respectively.
a) unit price-elastic; perfectly price-inelastic.
b) price-elastic; price-inelastic.
c) perfectly price-elastic; unit price-elastic.
d) price-inelastic; price-elastic.

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