1. If a 10% increase in price leads to a 40% decrease in quantity demanded, what is the value of price elasticity of demand? Show your work. 2. Which of the following will cause the demand for a good or service to be inelastic? · Having few substitutes . Alonger time period · Being a luxury · Being a large share of the consumer's budget 3. If the price elasticity of demand is equal to 0.5, is demand elastic, inelastic, or unitary elastic?
1. If a 10% increase in price leads to a 40% decrease in quantity demanded, what is the value of price elasticity of demand? Show your work. 2. Which of the following will cause the demand for a good or service to be inelastic? · Having few substitutes . Alonger time period · Being a luxury · Being a large share of the consumer's budget 3. If the price elasticity of demand is equal to 0.5, is demand elastic, inelastic, or unitary elastic?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
Section: Chapter Questions
Problem 2PA
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Transcribed Image Text:1. If a 10% increase in price leads to a 40% decrease in quantity demanded, what is the value of price elasticity of demand? Show your work.
2. Which of the following will cause the demand for a good or service to be inelastic?
· Having few substitutes
· A longer time period
· Being a luxury
· Being a large share of the consumer's budget
3. If the price elasticity of demand is equal to 0.5, is demand elastic, inelastic, or unitary elastic?
4. Will a perfectly elastic supply curve be vertical, horizontal, or upward-sloping?
5. What price elasticity of supply will lead to a smaller increase in quantity when price changes-elastic, inelastic, or unitary elastic?
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