ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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drop by more than 25 units per month.
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drop by less than 25 units per month.
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rise by more than 25 units per month.
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rise by less than 25 units per month.
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Detailed explanation-1: -inelastic. When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about a. 0.22.
Detailed explanation-2: -The revenue would increase by $8. The value of elasticity of demand is. which is greater than 1. Hence the demand is elastic.
Detailed explanation-3: -The price elasticity of demand (which is often shortened to demand elasticity) is defined to be the percentage change in quantity demanded, q, divided by the percentage change in price, p. The formula for the demand elasticity (ǫ) is: ǫ = p q dq dp .
Detailed explanation-4: -Definition: Cross elasticity (Exy) tells us the relationship between two products. it measures the sensitivity of quantity demand change of product X to a change in the price of product Y. Price elasticity formula: Exy = percentage change in Quantity demanded of X / percentage change in Price of Y..