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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

For each of the following pairs of goods, which has the higher price elasticity of demand?

  1. a. Airline travel in the short run or airline travel in the long run
  2. b. Television sets or Sony television sets
  3. c. Cars or Fords
  4. d. Cell phones or Samsung cell phones
  5. e. Popcorn or Orville Redenbacher’s popcorn

To determine

Identify the higher price elasticity of demand.

Explanation

Option a:

The percentage change in quantity demanded of airline travel in the long-run is higher than the percentage change in quantity demanded of airline travel in the short-run. Hence, airline travel in the long-run has the higher price elasticity.

Option b:

A particular television set like S television set has several substitutes. When a good has more substitutes, the price elasticity will be higher. Hence, television S has higher price elasticity.

Option c:

A car like F is a luxury good and not a necessity good...

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