When the price of a good increased by 50 percent, quantity demandeddecreased by 100 percent. What is the absolute value of the price elasticity ofdemand?Select one:O a. 0.04Ob25O c. 100O d. 2Assume the price of good Y increases by 2% and the cross price elasticity ofdemand with good X is 1. What economic classification describes good X in thissituation?Select one:O a. An inferior goodO b. A complementO c. A substituteOd. A normal good

The price elasticity of demand shows how much demand is sensitive with respect to price. The price…

Answered: When the price of a good increased by…

When the price of a good increased by 50 percent, quantity demanded decreased by 100 percent. What is the absolute value of the price elasticity of demand? Select one: O a. 0.04 Ob 25 O c. 100 O d. 2

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

See similar textbooks

Related questions

Q: For the general multiple regression model y =B₁ + B₂x₂ +B₂x₂ + ... + B x x x + e the following two…

A: The regression equation shows the relationship between dependent and independent variables. Simple…

Q: Dr. Pepito Perigrino wishes to have Php150,000.00 when he retires 15 years from now. If he can…

A: Here since the person is depositing fixed amount in the fixed intervals, hence this is called…

Q: 4. The worker is taxed a lump sum of £30. Show the effect on the budget curve graphically. Would…

A: Backward bending labor supply curve is defined as the labor curve that reflects a situation that…

Q: The demand curve facing a firm operating under monopoly is given by; P = 170 – 5Q The cost…

A: "Monopoly is a market structure in which there exists only one single firm. A monopolist is a price…

Q: Consider the graph below. MC are constant and equal to ATC. What is going to be producer surplus of…

A: MC(Marginal cost) refers to extra/additional costs that the firm has to bear in order to produce an…

Q: Given the following pertinent data for four alternatives, what is the best alternative using the…

A: Incremental rate of return is one of the methods for selecting the economically best alternative…

Q: A firm's cost curves are given in the following table. 9 0 1 2 3 4 5 6 7 8 9 10 i) ii) iii) iv) TC…

A: TC(total cost) is the sum of fixed(TFC) and variable (TVC) costs. ATC(average total cost) is the…

Q: Variable: RMQG Dependent Method: Least Squares Date: 06/30/20 Time: 16:55 Sample (adjusted): 2010M02…

A: Given The estimated coefficient of market return (RORD) is 1.224135 The estimated standard error of…

Q: The idea behind the Phillips curve is that when the unemployment rate is low wages will increase…

A: Answer to the question is as follows:

Q: Analyze below the Cash Flow and compute for the unknown value.

A: The annual worth method or AW method implies that all the incomes along with disbursements, regular…

Q: In the model of monopolistic competition, if the price is are earning than average costs, then firms…

A: Monopolistic competition: In this market differentiated products are sold by many firms.

Q: Show how the concept of focal points can lead us towards unique outcomes in games where multiple…

A: The Nash equilibrium, which bears the name of the mathematician John Nash, is the most popular…

Q: QUESTION 44 If France has a labor force of 30,000 hours of labor, after trade begins, it will…

A: Opportunity cost is the cost of producing one good in terms of other. Comparative advantage is when…

Q: If interest is at the rate of 8% compounded semi-annually, what sum must be invested at the en each…

A: The future worth of an annuity is the value of a group of recurring payments at a particular date in…

Q: Mr. Zzz deposited $25,000 in a bank which offers a compound annual interest of 7%. How long will it…

A: Given, Principal = $25,000 Rate of interest = 7% Amount = $35,800

Q: To tackle climate change, suppose Singapore imposed a carbon tax t on our imports of energy.…

A: Taxes on carbon are important for reducing the harmful impacts of carbon emissions. To limit the…

Q: What are the activities of economic activities

A: The study of an economy's production and consumption processes falls within the social science…

Q: QUESTION 10 Which of the following types of firms are likely to respond to a corrective tax by…

A: In a market, when a firm is producing a good with negative externality, governement used various…

Q: The Exchange rate is 1£ = 2$. Which action would be undertaken if a Managed Floating regime is…

A: When talking about managed floating regime, it can be said that it is the exchange rate system in…

Q: An IT man buys boxes of diskettes and is to pay for it by making 30 monthly payments of P50 each,…

A: Number of period : 30 Monthly payments: 50 Yearly interest rate : 6 % Monthly interest rate : 0.005

Q: 10. Which economic variable is determined by the Quantity Equation: M (Money supply) V (Velocity of…

A: Quantity theory of money shows the relationship between Money supply , Velocity , Quantity( Real…

Q: The city council of a fast growing city in the west of Canada is planning to construct a new tunnel…

A: The cash flow diagram is a visual representation of the receipts and expenses of a project. The…

Q: Money is compounded annually at the rate of 6%, find the present value of a sequence of 12 semi-…

A: In the present worth method of comparison, the cash flows of each option will be decreased to time…

Q: The market for calculators is given by the following supply and demand equations (and graphed on the…

A: The demand curve shows an inverse relationship between price and quantity demanded. The supply curve…

Q: b. How many screens will be built if the real interest rate is 5.5 percent? screen(s) c. How many…

A: The marginal product of an input, say labour, is defined as the extra output that results from…

Q: Yogajothi is thinking of investing in a rental house. The total cost to purchase the house,…

A: The rate of interest is 6% compounded monthly. Thus, Firstly, compute the effective interest rate.…

Q: A computer production facility has a daily demand rate of 6 and a daily production rate of 20. Set…

A: EPQ(Economic production quantity) is an optimum quantity for a good/item that is produced by the…

Q: 6. The Crispy-Cola Corp. (CCC) wants to expand into selling its cans of cola via vending machines…

A: Given, Crispy-Cola Corp. (CCC) expands into selling its cans of cola by vending machinesIt…

Q: 7. The Acme Software Corp. has developed at a cost of $500,000 - two software programs for…

A: Willingness to Pay is defined as the maximum price that consumer is willing to pay for a specific…

Q: Discuss how countries promote free trade and, in turn, protect the local economy from foreign…

A: Local economy The term "local economy" refers to the geographic location bordering your home that…

Q: Can Giffin goods also be normal goods?

A: The type of goods that people purchase depends upon the income of the individuals. Usually…

Q: If the production function is Q = 30 + 22L + 30K, what's the most you can produce with 5 workers (L)…

A: As given Production Function Q = 30 + 22L + 30K Also K( capital) = 7 units L(workers) = 5

Q: Constant returns to scale indicates a case where a change in all inputs leads to a proportional…

A: Economies of scale or increasing returns to scale is when the increase in output is more than the…

Q: Let's suppose you have $1 million to invest. You are considering to invest in UK first, then…

A: Covered interest rate arbitrage is the practice of utilizing favorable interest rate differentials…

Q: Which of the following is FALSE about the theory of modern capitalism? a. Socialismn will still…

A: Capitalism is defined as a system of economic governance in which private ownership is promoted. It…

Q: Mrs. Rochester earns $4500 a week and spends her entire income on computers and pastries, since…

A: Dear student, you have asked multiple sub-part questions in a single post.In such a case, as per the…

Q: A profit maximizing firm operating under conditions of perfect competition is producing daily output…

A: As given a profit maximizing firm operating under conditions of perfect competition where Revenue =…

Q: a) Define operating leverage b) Firm A operating in a perfectly competitive market sells its…

A: Operating leverage determine the fixed cost of a firm as a percentage of the total costs. It helps…

Q: 1. An amortization of a debt is in a form of a gradient series of P10,000 on the first year, P9,500…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: For the following three questions, assume that leisure is a normal good. 3. A worker has a wage of…

A: Given information Wage rate=$10 Working hours=8 hours Let's take the number of hours=24 hours.

Q: Natural resources are: more important determinants of productivity today than ever before. the…

A: Natural Resources are defined as the resources that occur in nature and are used for consumption and…

Q: In order to prove that peanut butter and Jelly are complements, one should measure the and get a…

A: Cross price elasticity of demand for good X with respect to good Y : It refers to the percentage…

Q: a.Why is it important to manage Globalisation? b.What are the consequences of NOT managing…

A: Globalization refers to the opening of trade between countries around the world such that everyone…

Q: Alicia has flipped a coin, and it has landed heads up 10 times in a row. She therefore thinks the…

A: The utility is maximized where the Marginal utility per dollar is same across the goods. If the…

Q: When a perfectly competitive firm sells additional units of output, its total revenue will O…

A: Under the Perfectly competitive market there is large number of buyer and sellers in this market,…

Q: Which is NOT a good practice for choosing a model? Select one: a. Considering theories,…

A: The residuals will be scattered randomly above and below the horizontal axis when a linear model is…

Q: 7. The government bans all payday loans. Show the effect on Samson's budget set.

A: For rational consumers, the preference is always to consume more commodities because the consumers…

Q: a. Assume that the elasticity of demand for Fanta is -0.5 while the elasticity of supply is 0.7.…

A: Elasticity of demand is defined as the responsiveness of quantity demanded of a good to its own…

Q: You sell bracelets online. The demand for these bracelets is: P = 84 - 2Q The bracelets cost $6 each…

A: The optimal price is that price point at which the aggregate profit of the seller is greatest. When…

Q: 2. The XYZ Company, anticipating a downturn in its sales, closed one of its factories at the end of…

A: Returns to scale refers to the proportionality of the change in output with respect to the change in…

Concept explainers

Elasticity of Demand and Supply

The elasticity of demand and supply are two important concepts of microeconomics. The elasticity of demand measures the responsiveness of consumers’ demands to the price change, changes in income of consumers, and changes in the price of the related goods. Similarly, the elasticity of supply refers to the proportionate change in the quantity supplied due to the proportionate change in the price. In other words, it can be said that elasticity of supply measures how the quantity of supply changes when the price changes of that particular product.

Question

When the price of a good increased by 50 percent, quantity demanded
decreased by 100 percent. What is the absolute value of the price elasticity of
demand?
Select one:
O a. 0.04
Ob
25
O c. 100
O d. 2
Assume the price of good Y increases by 2% and the cross price elasticity of
demand with good X is 1. What economic classification describes good X in this
situation?
Select one:
O a. An inferior good
O b. A complement
O c. A substitute
Od. A normal good

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Using the midpoint formula for calculating the elasticity of supply, if the price of a good rose from $95 to $105, what would be the elasticity of supply if the quantity supplied changed from a. 38 to 42? b. 78 to 82? c. 54 to 66?
Explain why using the midpoint formula for calculating the elasticity of demand gives the same result whether price increases or decreases, but using the initial price and quantity instead of the average does not.
Suppose the cross-price elasticity of apples with respect to the price of oranges is 0.4, and the price of oranges falls by 3. What will happen to the demand for apples?
Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?
If supply is elastic, will shifts in demand have a larger effect on equilibrium quantity or on price?
What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?
Describe the general appearance of a demand or a supply curve with infinite elasticity.
If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded of that product, will another 10 decrease in the price cause another 3 increase (no more and no less) in quantity demanded?
The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
Why is the supply curve with constant unitary elasticity a straight line?