ECON101 Exam Solutions Fall 2018: Opportunity Cost, Common Stock
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ECON101 Full Course Notes
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Econ 101: the correct answer is a. Ped = % change in quantity demanded/% change in price. Since elasticity of demand is always measured in absolute terms, then. Ed = 0. 15: the correct answer is b. Explanation: demand does not change relative to price changes: the correct answer is e. A decrease in income will lead to an increase in demand for the product. Explanation: negative elasticity of demand means that when income moves in one direction, quantity demanded will move in the other. It s important to pay attention to whether the question is asking for elasticity of demand or price elasticity of demand. 0 < ed < 1, demand is inelastic. Demand for inferior goods increases when income decreases. Tips & tricks: the correct answer is d. Explanation: cross price elasticity = % change in quantity demanded of diet cola/% change in price of coffee. % change in quantity demanded of diet cola:
