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Posts: 177
2 months ago

Question 1.

A value of the absolute price elasticity of demand equal to 0.25 indicates that

• a 0.25% decrease in price leads to a 1% increase in quantity.

• a 1% decrease in price leads to a 2.5% increase in quantity demanded.

• a 10% decrease in price leads to a 4% increase in quantity demanded.

• a 10% decrease in price leads to a 25% increase in quantity demanded.

Question 2.

Absolute price elasticities are calculated for four goods, and the values are: 0.009; 1.0; 3.5; and 4. Which indicates the most price-responsive situation?

• 0.009

• 3.5

• 4.0

• 1.0
Source  Download
Economics Today: The Micro View
Edition: 19th
Author:
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2 months ago
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Answer 1

a 10% decrease in price leads to a 4% increase in quantity demanded.

Answer 2

4.0
1
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2 months ago
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