Question

Assume economists have determined that the price elasticity of demand for housing in a given range of the demand curve is -1.75. Suppose that the price of housing increases by 10 percent.

- Given the value of
*price elasticity of demand*, is demand for housing elastic or inelastic in the given range of the demand curve? - What happens to quantity demanded of housing (what is the
*percentage change in the quantity demanded of housing*) as price of housing increases by 10%? - As price of housing increases by 10%, does total expenditure (spending) on housing increase or decrease? Please explain your answers.

Answer #1

PED = - 1.75

Percentage change in Price = 10 %

Price Elasticity of Demand = %age change in Quantity Demanded / %age change in Price

-1.75 = %age change in Quantity demanded / 10%

%age change in Quantity demanded = -17.5 %

**Given the value of Price Elasticity of demand, the
demand for housing is highly elastic (PED > 1)**

**With the change in Price at 10 % the Quantity demanded
of Housing falls by 17.5 %**

**As demand for housing is higly elastic, the spending on
housing decreases by 17.5% with 10 % increase in the price of
Housing**

1) Using the midpoint method, the price elasticity of demand is
determined to be about 0.85. If there is a 10% decrease in the
quantity demanded of the product then what effect would this have
on the price of the product?
A decrease in the price of the product from $8.50 to $10
A 11.8% increase in the price of the product
An increase in the price of the product from $8.50 to $10
2)The ________ is negative for complementary...

1-As we move up the demand curve, the price elasticity of demand
* A) increases B) decreases C) becomes unitary D) does not
change
2-If the price of lemonade increases relative to the price of
grape juice, the demand for: * A) grape juice will decrease. B)
grape juice will increase. C) lemonade will decrease. D) lemonade
will increase.
3-An increase in price will result in no change in total revenue
if: * A) the percentage change in price is...

1. What is the numerical value for the price elasticity of
demand if a price change causes no change in quantity
demanded?________ What is the numerical value for elasticity of
demand if a price change causes no change in total revenue?________
What is the elasticity of demand for a horizontal demand
curve?________ What is the elasticity of demand if a price increase
leads to an increase in total revenue? elastic /
inelastic. What is the numerical value for the elasticity...

1. If the price elasticity of demand for cigarettes is 0.55, and
the price of cigarettes increases by 10 percent, then the quantity
of cigarettes demanded will fall by what percent?
2. If the price elasticity of demand for chicken is 2, then a
20% decrease in the price of chicken will lead to what percentage
increase in the quantity demanded of chicken?
3. When the price of NBA tickets is $25 each, 30,000 tickets are
sold. After the price...

Assume the price elasticity of demand for a good is –1.23. The
demand for this good is _______ which means the percentage change
in quantity demanded (in absolute value) is _______ the percentage
change in price (in absolute value).
Group of answer choices
elastic, larger than
elastic, smaller than
inelastic, smaller than
inelastic, larger than

1.Price elasticity of demand is defined as:
Multiple Choice
a.the slope of the demand curve.
b.the slope of the demand curve divided by the price.
c.the percentage change in price divided by the percentage
change in quantity demanded.
d.the percentage change in quantity demanded divided by the
percentage change in price.
2. The Midpoint Method for Elasticity uses which of the
following?
Multiple Choice
a.Average percentage change in price only
b.Average percentage change in quantity only
c.Average percentage change in...

Part 2:
For each of the following,
(a) calculate the elasticity,
(b) interpret your result (in terms of whether a good is
elastic/inelastic, and what the percentage change in quantity will
be in response to a 1% change in price), and
(c) indicate what would happen to revenues for this good if the
price was increased
In response to a 10% increase in price, the quantity demanded
of Bubly decreased by 20%
In response to a 5% decrease in price,...

(60)A perfectly inelastic demand curve has an elasticity
coefficient of:
(a)1
(b)0.25
(c)∞
(d)None of the above
Akal mn wahed
Extra Credit Questions-Optional
(61)If the percentage change in the quantity supplied of
a good is less than the percentage change in price, price
elasticity of supply is:
(a)Inelastic
(b)Perfectly inelastic
(c)Elastic
(d)Unitary elastic
(62)If the percentage change in the quantity demanded of
a good is equal to the percentage change in price, price elasticity
of demand is:
(a)Inelastic
(b)Perfectly 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

If the percentage change in
price is 10 percent and the demand is elastic, how would the
quantity demanded percentage change?
If a decrease in price
increases total revenue, what can you determine about the
elasticity of demand for the good?

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