*Please provide the answer but also explain what is inelastic, elastic,unitary e

1)A)inelastic as elasticity = % change in quantity/% change in price = -5%/10% = -0.5 as magnitude of elasticity is

ID: 1098438 • Letter: #

Question

*Please provide the answer but also explain what is inelastic, elastic,unitary elastic

*Please explain elasticity of demand values

*Please explain what is an inferior good, how to obtain the answer.

1) If the price of gasoline increases 10% and quantity demanded decreases by 5%, then the demand curve for gasoline is:

A) inelastic.

B) elastic.

C) unitary elastic.

D) a perfect substitutable good.

2) If a good has an elasticity of demand of 21, then we say the good is:

A) highly inelastic.

B) unitary elastic. C) not elastic.

D) highly elastic.

3) For inferior goods, when an individual's income decreases, quantity demanded for these goods increases.

A) True

B) False

1)A)inelastic

as elasticity = % change in quantity/% change in price

= -5%/10%

= -0.5

as magnitude of elasticity is <1. So it is inelastic.

Inelastic indicates magnitude of elasticity <1

2)D)highly elastic.

As eladticity is >1.It is elastic and as 21 is much greaterr than 1. hence highly elastic

3) A)True

Inferior good is good which is demanded less when income increases

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