True or False: A 10% reduction in price that leads to a 10% increase in the...

True or False: A 10% reduction in price that leads to a 10% increase in the amount purchased indicates a price elasticity of more than 1 (in absolute value).

True

False

True or False: A 10% reduction in price that leads to a 2% increase in total expenditures (or total revenue) indicates a price elasticity of more than 1 (in absolute value).

True

False

If the percentage change in price is less than the resultant percentage change in quantity demanded, demand is .

Expert Solution

1.FALSE,beacause %change in quantity = % change in price = 1,And it is called Unitary.

%change in quantity > % change in price >1 is elastic,so here it is unitary because %change in quantity = % change in price

2.TRUE,

If elastic: The quantity effect outweighs the price effect, meaning if we decrease prices, the revenue gained from the more units sold will outweigh the revenue lost from the decrease in price.

If inelastic: The price effect outweighs the quantity effect, meaning if we increase prices, the revenue gained from the higher price will outweigh the revenue lost from less units sold.

3.When the percentage change in the quantity demanded is less than the percentage change in price, then demand is inelastic

Rahul Sunny answered 7 months ago

True or False: when goods are perfect complements, a change in price leads to an income...

True or False: when goods are perfect complements, a change in price leads to an income effect equal to the overall effect. When goods are perfect substitutes, a change in price leads to a substitution effect equal to the overall effect. Explain.

If an increase in the price of Y leads to an increase in the consumption of...

If an increase in the price of Y leads to an increase in the consumption of X, how would you describe the relationship between X and Y? X and Y are both normal X and Y are both inferior X is a complement for Y X is a substitute for Y

Explain how a tariff reduction leads to an increase in the quantity of imports and a...

Explain how a tariff reduction leads to an increase in the quantity of imports and a decrease in equilibrium price. Explain how trade barriers raise wages in protected industries by reducing average wages economy-wide. You have been placed in charge of trade policy for the U.S. Suppose corn is a crop that is doing well and the export market is beginning to expand. Corn production is considered an infant industry. Corn producers come to you and ask for tariff protection...

Is the statement " an increase in labour supply leads to a reduction in real wage"...

Is the statement " an increase in labour supply leads to a reduction in real wage" true? Explain

1. Explain how a tariff reduction leads to an increase in the quantity of imports and...

1. Explain how a tariff reduction leads to an increase in the quantity of imports and a decrease in equilibrium price. 2. Explain how trade barriers raise wages in protected industries by reducing average wages economy-wide. 3. You have been placed in charge of trade policy for the U.S. Suppose corn is a crop that is doing well and the export market is beginning to expand. Corn production is considered an infant industry. Corn producers come to you and ask...

If a 20 per cent reduction in the price of Hello magazine leads to a 6...

If a 20 per cent reduction in the price of Hello magazine leads to a 6 per cent increase in its sales, the price elasticity of demand is what?

How much would Marlboro sales have had to increase in response to a price reduction to $2 for that price reduction to increase profit?

On Friday, April 2, 1993, executives at Phillip Morris made a bold move, announcing a reduction of approximately 20 percent in the price of Marlboros. The retail price dropped from $2.20 to $1.80 a pack. The announcement sent shock waves through the cigarette industry. The reaction in the stock market was swift and punishing: Phillip Morris’s stock price dropped 23 percent in a single day, erasing $13.4 billion in stockholder value. That day was immediately dubbed “Marlboro Friday.” In Application...

Which of the following is true and which of the following is false? Self-selection leads to...

Which of the following is true and which of the following is false? Self-selection leads to incorrect statistical inference about the target population. True False Self-selection is a non-sampling error and can be reduced by increasing sample size. True False

True/False or Uncertain? “If the “sticker price” on a t-shirt is $10 and the sales tax...

True/False or Uncertain? “If the “sticker price” on a t-shirt is $10 and the sales tax is 6%, the actual price paid by consumers will be $10.6. If we raise the tax to 10% both the sticker price and the actual price will rise.”

7. “A decrease in the price of crude oil leads to an increase in total spending...

7. “A decrease in the price of crude oil leads to an increase in total spending on gasoline.” Is the demand for gasoline elastic or inelastic? Explain in detail with a diagram. 8. Suppose income goes down. Draw a diagram where X is a normal good and Y is an inferior good. 9.Suppose income goes down. Draw a diagram where X is an inferior good and Y is a normal good

Question