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ECON 1001 Lecture Notes - Lecture 5: Demand Curve, Normal Good, Grater

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lilaclion298
5 Nov 2018
School
Carleton University
Department
Economics
Course
ECON 1001
Professor
Eng Kooi Lim

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Document Summary

Strictly speaking, the number should be negative, however, we know that a well behaved demand curve is always negative, therefore, the elasticity will always be negative as well. Price of elasticity of = 15% = 1. 5. We will drop the minus sign and report all price elasticities as positive numbers. Calculating percentage changes: standard method of computing the percentage (%) change: demand. Problem: the standard method gives different answers depending on where you start. From a to b, price rises 25%, quantity demanded falls 33% From b to a, price falls 20%, q rises 50% 40/22. 6=1. 8 (12/8)x100%=40% (250-200)/225x100%=22. 6: you"re going to find elasticities being expressed, using the midpoint method, the percentage change in p equals, the percentage change in q equals, the price elasticity of demand equals. If you can easily drop one item and. Calculate the price elasticity of demand for hotel rooms.

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Related Questions

1. Clothing retailers often use sales, where some or all products are sold at a discount price, to increase revenue. What does this suggest about the price elasticity of demand for retail clothing?

A) It is elastic.

B) It is inelastic.

C) It is unit elastic.

D) This tells us nothing about elasticity.

2. If demand is inelastic, then increasing price will do what to revenue?

A) It is impossible to say.

B) Decrease

C) Increase

D) Nothing will happen to revenue.

3. If P increases from 200 to 202 and Qd decreases from 50 to 49, what is the price elasticity of demand? ___

4. If elasticity (i.e. price elasticity of demand) is -3, a 1.5% increase in price would lead to what change in quantity demanded?

A) a decrease of 3%

B) a decrease of 4.5%

C) an increase of 1.5%

D) an increase of 3%

5. If you know that the demand curve is given by: Q = 20-2P What is the price elasticity of demand if P = 4?

A) -0.666

B) -0.33

C) -1.33

D) -1.66

1. Elasticity shows the responsiveness of supply or demand to changes in price. What are the factors exerting influence on price elasticities of supply and demand?
2.Would you consider your demand for gas to be relatively elastic or 
3. What are the key determinants of the price elasticity of demand for a product? Which determinant is the most important?

a) What is the advantage of using the price elasticity rather than the slope of the demand curve or its inverse to measure the responsiveness in the quantity demanded of a commodity to a change in its price?

b) Why and how is the formula for arc price elasticity of demand different from the formula for point price elasticity of demand?