PTER: ELASTICITY Name MULTIPLE CHOICE. 1) The price elasticity of demand is a me

Question

PTER: ELASTICITY Name MULTIPLE CHOICE. 1) The price elasticity of demand is a measure of the 1 A) sensitivity of a good's price to changes in demand. 8) relationship between price and profitability Choose the one alternative that best completes the statement or the question. of buyers of a good to changes in its price effect of changes in demand on the price 2 The price-elasticity of demand is always negative becouse of A) scarcity. 8) percent-changes being used in the formula 2 the law of demand. the midpoint formula )Suppose you are given the following data on demand for a Price $10 30 40 50 60 70 10-6o 65 ?-? The ARC price elasticity of demand when price incresses from $6 to $7 is 3) A)-0.856. B)-1. 1166. D)-0.525 4) When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price -s 1 160) 038 elasticity demand coefficient for this product is 4) A)67. 8)067.15. D)015. 5) If the price elasticity of demand for a product is demanded by 5)- equal to 0.5, then a 10 percent decresse in price will increase quantit .5:-o D) 0.05%. A) 20%. B) 0.5%,48%. )Use the data in the table below to answer the following question Quantity Demanded per Unit of Time 12 17 20 8-20 $20 18 16 o.5 30 36 12 14.S 48

Explanation / Answer

2. Option C. As price and demand are negatively related
3. Option B
=((60-70)/(SUM(60+70)/2))/((7-6)/(SUM(7+6)/2)) = -1
6.Option A
=((12-17)/(SUM(12+17)/2))/((20-18)/(SUM(20+18)/2)) = -3.2
7. Option D
=((40-44)/(SUM(40+44)/2))/((8-6)/(SUM(8+6)/2)) = -0.33
8. Option B, demand decreases with increase in prices
9. Option B, 10%/15% = 0.667 as the value is less than 1

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