ECON 1000 Chapter Notes - Chapter 3: Demand Curve, Normal Good, Luxury Goods

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Elasticity of demand shows how responsive consumers are to price changes. The % change in quantity demanded is more than the % change in price. A price change causes total revenue to change in the opposite direction. The % change in quantity demanded is less than the % change in price. A price change causes total revenue to change in the same direction. The % change in quantity demanded is equal to the % change in price. A price change does not affect total revenue. There is a constant price and a horizontal demand curve. There is a constant quantity of product demanded and a vertical demand curve. Determinants of the price elasticity of demand: portion of consumer incomes. The less amount of income it takes away, the more inelastic: access to substitutes. If there are (more) substitutes available consumers will be more sensitive to price. 3. 1 price elasticity of demand changes, which increases elasticity: necessities vs luxuries.

Related Questions

If the percentage change in the quantity demanded of a good is less than the percentage change in price, the price elasticity of demand is:

A) Elastic

B) Inelastic

C) Perfectly inelastic

D) Unitary elastic

byzantiummole828

1. The concept of price elasticity of demand measures:

a. the slope of the demand curve.

b. the number of buyers in a market.

c. the extent to which the demand curve shifts as the result of a price decline.

d. the sensitiveness of quantities demanded to price changes.

2. When the percentage change in price is less than the resulting percentage change in quantity demanded:

a. demand is elastic.

b. demand is inelastic.

c. demand is unit elastic.

d. none of the above.

3. The elasticity of demand:

a. will be the same at each price-quantity combination on a stable demand curve.

b. tends to be elastic in high-price ranges and inelastic in low-price ranges.

c. tends to be inelastic in high-price ranges and elastic in low-price ranges.

d. is infinitely large for a perfectly inelastic demand curve.

4. Suppose that as the price of Y falls from $2.00 to $1.80 the quantity of Y demanded increases from 110 to 121. It can be concluded that the price elasticity of demand is: _______.

5. Total revenue rises as the price of a good increases if price elasticity of demand is:

a. unitary elastic

b. perfectly inelastic.

6. The demand for such products as salt, bread, and electricity tend to be:

a. relatively price elastic.

b. relatively price inelastic.

c. of unit price elasticity.

d. perfectly price elastic.

coffeeelephant81

1. In each case below, what is the value of the price elasticity of demand? Is demand perfectly inelastic, inelastic, unit elastic, elastic or perfectly elastic?

a. Price falls by 10%, quantity demanded rises by 8%

b. Price rises by 3%, quantity demanded falls by 3%

c. Price rises by 1%, quantity demanded falls by 5%

d. Price rises by 5%, quantity demanded collapses to zero

e. Price falls by 2%, quantity demanded does not change

taupemule214

ECON 1000 Chapter Notes - Chapter 3: Demand Curve, Normal Good, Luxury Goods

ECON 1000 Full Course Notes

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