ECON 1201 Chapter Notes - Chapter 6: Dont, Normal Good, Demand Curve

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24 Jan 2018

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Elasticity: a measure of how much one economic variable responds to changes in another. Price elasticity of demand : the responsiveness of the quantity demanded to a change in price, measured by dividing the percentage change in the quantity demanded of a product by the percentage change in the product"s price. Percentage change is used in measuring the price elasticity of demand\ Price elasticity of demand: percentage in quantity demanded/ percentage change in price. Price elas of demand is not the same as the slope of the demand curve** Elastic demand: demand is elastic when the percentage change in the quantity demanded is greater than the percentage change in price, so the price elasticity is greater than 1 in absolute value. Inelastic demand: demand is inelastic when the percentage change in quantity demanded is less than the percentage change in price, so the price elasticity is less than 1 in absolute value.

Related Questions

Which of the following statements about price elasticity of demand is false?

a) The value of price elasticity of demand is the reciprocal of the value of the demand curve's slope

b) If quantity demanded changes by a larger percentage than the percentage change in price, demand is elastic

c) The value of price elasticity of demand along a downward sloping demand curve is always negative

d) A linear downward sloping demand curve has a varying price elasticity coefficient

crimsonreindeer712

1. The concept of price elasticity of demand measures:

a. the slope of the demand curve.

b. the number of buyers in a market.

c. the extent to which the demand curve shifts as the result of a price decline.

d. the sensitiveness of quantities demanded to price changes.

2. When the percentage change in price is less than the resulting percentage change in quantity demanded:

a. demand is elastic.

b. demand is inelastic.

c. demand is unit elastic.

d. none of the above.

3. The elasticity of demand:

a. will be the same at each price-quantity combination on a stable demand curve.

b. tends to be elastic in high-price ranges and inelastic in low-price ranges.

c. tends to be inelastic in high-price ranges and elastic in low-price ranges.

d. is infinitely large for a perfectly inelastic demand curve.

4. Suppose that as the price of Y falls from $2.00 to $1.80 the quantity of Y demanded increases from 110 to 121. It can be concluded that the price elasticity of demand is: _______.

5. Total revenue rises as the price of a good increases if price elasticity of demand is:

a. unitary elastic

b. perfectly inelastic.

6. The demand for such products as salt, bread, and electricity tend to be:

a. relatively price elastic.

b. relatively price inelastic.

c. of unit price elasticity.

d. perfectly price elastic.

coffeeelephant81

If the demand for cell phone service is inelastic then:

a. percentage change in quantity demanded is more than percentage change in price

b. percentage change in quantity demanded is less than the percentage change in price

c. percentage change in quantity demanded is equal to the percentage change in price

d. any of the above is possible

jadeskunk266

ECON 1201 Chapter Notes - Chapter 6: Dont, Normal Good, Demand Curve

ECON 1201 Full Course Notes

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