1. The price of a good rises from $6 to $8. Thus, the quantity demanded of that good falls from 150 to 75 units. Using the point-slope formula, calculate the Price Elasticity of Demand. Note: You’ll use this answer to help you with Question 2 & 3 (coming up next). A. -1.50 B. -0.66 C. -2 D. -0.04 E. -25 F. -1 2. Given your response in Question 1, classify the coefficient of the Price Elasticity of Demand. A. Elastic B. Inelastic C. Perfectly Elastic D. Perfectly Inelastic E. Unit Elastic 3. Which of the following statements is the best interpretation of the coefficient of the Price Elasticity of Demand in Question 1? A. There will be a 0.66 percent decrease in the Quantity Demanded. B. A 1 percent increase in the Price of a good corresponds to a 0.66 percent decrease in the Quantity Demanded for that good. C. A 1 percent increase in the Price of a good corresponds to a 1.55 percent increase in the Quantity Demanded for that good. D. Given the Price increase of a good, there will be no change in the Quantity Demanded for that good. E. Given the Price increase of a good, there will be an inelastic response. F. A 1 percent increase in the Price of a good corresponds to a 1.55 percent decrease in the Quantity Demanded for that good

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 4.9P: (Other Elasticity Measures) Complete each of the following sentences: a. The income elasticity of...

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1. The price of a good rises from $6 to $8. Thus, the quantity demanded of that good falls from 150 to 75 units. Using the point-slope formula, calculate the Price Elasticity of Demand. Note: You’ll use this answer to help you with Question 2 & 3 (coming up next).

A. -1.50

B. -0.66

C. -2

D. -0.04

E. -25

F. -1

2. Given your response in Question 1, classify the coefficient of the Price Elasticity of Demand.

A. Elastic

B. Inelastic

C. Perfectly Elastic

D. Perfectly Inelastic

E. Unit Elastic

3. Which of the following statements is the best interpretation of the coefficient of the Price Elasticity of Demand in Question 1?

A. There will be a 0.66 percent decrease in the Quantity Demanded.

B. A 1 percent increase in the Price of a good corresponds to a 0.66 percent decrease in the Quantity Demanded for that good.

C. A 1 percent increase in the Price of a good corresponds to a 1.55 percent increase in the Quantity Demanded for that good.

D. Given the Price increase of a good, there will be no change in the Quantity Demanded for that good.

E. Given the Price increase of a good, there will be an inelastic response.

F. A 1 percent increase in the Price of a good corresponds to a 1.55 percent decrease in the Quantity Demanded for that good

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