ECONOMICS
ELASTICITY OF DEMAND
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
the average price of the product
|
|
|
the quantity demanded for the product
|
|
|
the percentage of change in the price of the product
|
|
|
the change in the quantity demanded
|
Detailed explanation-1: -The price elasticity of demand measures the responsiveness of quantity demanded to changes in price; it is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
Detailed explanation-2: -Price Elasticity of Demand = Percentage change in quantity / Percentage change in price. Price Elasticity of Demand =-15% รท 60%
Detailed explanation-3: -If the percentage change is not given in a problem, it can be computed using the following formula: Percentage change in Qd = (Q1-Q2) / [1/2 (Q1+Q2)] where Q1 = initial Qd, and Q2 = new Qd.
Detailed explanation-4: -The price elasticity of supply = % change in quantity supplied / % change in price.
Detailed explanation-5: -When calculating price elasticity of demand, if the numerator is positive, the denominator is: always less than zero.