EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 20, Problem 2P
Suppose that both wheat and com have an income elasticity of 0.1. LO22.1
a. If the average income in the economy increases by 2 percent each year, by what percentage does the quantity
b. Given that average personal income doubles in the United States about every 30 years, by about what percentage does the quantity demanded of com increase every 30 years, holding all other factors constant?
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Suppose you observe the price and quantity demanded of a good at two dates. There is a large
percentage change in price but only a small percentage change in quantity. Which is the most likely
price elasticity of demand?
O 1.5
O 1
O 0.5
1. Based on Table 1, find the best
1 point
answer to describe the table
Table 1: Price and Quantity of Good X
Price
Quantity
4
8
5
10
O Demand
Supply
Inelastic Supply
Unitary Elastic Supply
For product X, the price elasticity of demand has an
absolute value of 3.5. This means that quantity
demanded will increase by
O 1 unit for each $3.50 decrease in price, ceteris paribus.
O 1 percent for each 3.5 percent decrease in price,
ceteris paribus.
O 3.5 units for each $1 decrease in price, ceteris paribus.
O 3.5 percent for each 1 percent decrease in price,
ceteris paribus.
Chapter 20 Solutions
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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
- Answer the next question on the basis of the following demand schedule. Price $6 5 4 3 2 1 Quantity Demanded O 1 O 2 O 3 4 5 The price elasticity of demand is unit-elastic (based on the midpoint formula) Multiple Choice 6 LO throughout the entire price range because the slope of the demand curve is constant. in the $4 to $3 price range only. over the entire $3 to $1 price range. over the entire $6 to $4 price rangearrow_forwardIf a 10% change in price results in a 19.95% change in quantity supplied. then the price elasticity of supply is about O 1.33, and supply is inelastic. O 0.6, and supply is inelastic. O 1.995, and supply is inelastic. O 1.995, and supply is elastic. O 0.6, and supply is elastic. O 1.67, and supply is elastic. O 1.33, and supply is elastic. O 1.67, and supply is inelastic. O 0.75, and supply is elastic. O 0.75, and supply is inelas-tic.arrow_forwardSuppose that both wheat and corn have an income elasticity of 0.1 a. If the average income in the economy increases by 2 percent each year, by what percentage does the quantity demanded of wheat increase each year, holding all other factors constant? Holding all other factors constant, if 10 billion bushels are demanded this year, by how many bushels will the quantity demanded increase next year if incomes rise by 2 percent? b. Given that average personal income doubles in the United States about every 30 years, by about what percentage does the quantity demanded of corn increase every 30 years, holding all other factors constant?arrow_forward
- Suppose that the elasticity of supply is 1.60 and the price increases by 5%. We will predict a percent increase in the quantity supplied of: 8% 6% O 3.1% 12%arrow_forwardAs consumer incomes have increased in the United States since 1950, the real price of wheat (the price of wheat adjusted for inflation) has fallen and the quantity of wheat produced has increased. Which of the following explains these changes? O The income elasticity of demand for wheat is greater than +1.0 and the elasticity of supply of wheat is less than +1.0. O The income elasticity of demand for wheat is positive but less +1.0 and the producțivity of wheat farmers has increased. O Wheat is an inferior good and the productivity of wheat farmers has decreased. Government price support programs have decreased the price of wheat and increased the demand for wheat.arrow_forwardPop's Corn Popcorn shop normally sells 100 bags a day when the price is $6 per bag. On half-price Wednesday, the price is $3 and Pop's sells 150 bags. What is the price elasticity of demand? O 16.67 O 1.667 O 0.6 O 0.5 O 2arrow_forward
- An elasticity of 1.5 means that a 1% change in price will lead to a % change in quantity demanded. 0.5 O 3.0 1.0 O 15 O 1.5 siven a straight line demand curve, an entrepreneur can lower the price of a product to increase evenues until O price elasticity goes negative O price elasticity is elastic price elasticity is greater than 1 O price elasticity is unit elastic Statement I: A perfectly inelastic demand curve and a perfectly elastic supply curve are represented the same way on a graph. Statement Il: A perfectly elastic demand curve and a perfectly elastic supply curve are represented the şame way on a graph. O Statement II is true and statement I is false. O Both statements are false. O Both statements are true. O Statement I is true and statement II is false.arrow_forwardLet (inverse) demand be Pb = 113 - 4 Qb and (inverse) supply be Pv = 27. What quantity are sellers willing to sell at price below $ 27 per unit? Answer: your answer Submit Price ($) $120 $100 $80 $60 $40 $ 20 $0 0 LO 5 Demand e Quantity 10 Supply 15 Quantity Eqm 20 25 30arrow_forwardQUESTION 4 Apple wish to calculate the price elasticity of demand for iPhones, assuming prices increased from 400BD to 500BD and demand fell from 20,000 units to 18,000 units, what is the elasticity of demand? O 0.47 O2.11 O 1.78 O 6.09arrow_forward
- Question 2 If the price elasticity of demand is -4.0, a 5 percent decrease in price will increase quantity demanded by 125 percent. O 1.25 percent. 80 percent. 20 percent. O 0.8 percent.arrow_forwardAssume that the price of commodity Y rises by 13.5% and the cross price elasticity of demand with commodity X is 1.35. According to this situation, commodity X is O a. not related to commodity Y as the exact price of commodity Y has not been specified b. a complementary product as cross price elasticity of demand is positive O c. a substitute as cross price elasticity of demand is negative d.a substitute as cross price elasticity of demand is positivearrow_forwardWHICH OF THE FF. IS FALSE ABOUT Price elasticity of demand D O Dis inelastic when Ichange in quantity demanded| 1 O D is elastic when 1% change in quantity demanded > 1%change in price. O Dis perfectly elastic when |% change in quantity demanded > 0 while 1%change in price.|=0arrow_forward
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