0. If the demand for bacon is relatively elastic, a 10 percent decline in the pr
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Question
0. If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will (a) decrease the amount demanded by more than 10 percent (b) increase the amount demanded by more than 10 percent. (c) decrease the amount demanded by less than 10 percent. (d) increase the amount demanded by less than 10 percent Suppose we find that the price elasticity of demand for a product is 3 when its price is increased by 2 percent. We can conclude that quantity demanded: (a) increased by 6 percent (b) decreased by 6 percent (c) decreased by 9 percent (d) decreased by 12 percent 8. In which price range of the accompanying demand schedule is demand inelastic: Quantity Demanded Price $4 $3 S2 S1 (a) $4-$3 (b) S3-$2 (c) $2-$1 (d) Below $1 9. In which of the following instances will total revenue decline? (a) Price rises and price elasticity of demand has a value of one (b) Price falls and demand is elastic (c) Price rises and demand is inelastic (d) Price rises and demand is elastic 10. If the demand for farm products is price inelastic, a good harvest will cause farm revenues to (a) increase (b) decrease. (e) be unchanged. (d) either increase or decrease depending upon what happens to supply expenditures that a Other things being equal, the greater the proportion of a consumer's budget given good takes, the: I1. (a) more elastic the demand for the good. (b) less elastic the demand for the good (c) the more unitary elastic the demand for the good. (d) the smaller the income elasticity for the good.Explanation / Answer
Question 6
If demand for a good is relatively elastic then this implies that percentage change in quantity demanded is more than the percentage change in price.
So, it can be stated that a 10% decline in the price of bacon will lead to increase in the amount demanded of bacon by more than 10 percent.
The correct answer is the option (b).
Question 7
Price elasticity of demand = 3
Percentage increase in price = 2%
When price increases, quantity demanded decreases.
Calculate the percentage decrease in quantity demanded -
Percentage decrease = Price elasticity of demand * Percentage increase in price = 3 * 2 = 6%
Thus, quantity demanded will decrease by 6 percent.
The correct answer is the option (b).
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