12. If demand is elastic A. A two percent increase in price will result in less...

12. If demand is elastic

A. A two percent increase in price will result in less than a two percent decrease in the quantity demanded

B. A two percent increase in price will result in a two percent decrease in the quantity demanded

C. A two percent increase in price will result in more than a two percent increase in the quantity demanded

D. A two percent increase in price will result in less than a two percent increase in the quantity demanded

E. None of the above is correct

Expert Solution

Answer to the question no. 1:

Option e: None of the above is correct.

Explanation: The price elasticity of demand of a commodity is measured by using the formula: - (Percentage change in the quantity demanded) / (Percentage change in the price).

So, the demand is called price inelastic when the percentage change in the quantity demanded is higher than the percentage change in price. Or the ratio between the percentage change in quantity demanded and the percentage change in price is less than 1.

When the demand is price elastic, A two percent increase in price will result in more than a two percent decrease in the quantity demanded. This would be the correct answer. In case of the price elastic demand the quantity demanded is more responsive to a change in its price. And the value of the elasticity is greater than 1 in case of elastic demand.

Hope, I solved your query. Give good feedback.

Comment, I'll get back to you ASAP.

Stay safe. Thank you.

Rahul Sunny answered 7 months ago

1.If the supply of widgets is price-elastic, then a 10 percent increase in the price of...

1.If the supply of widgets is price-elastic, then a 10 percent increase in the price of widgets will cause which of the following? A. Shift the supply curve to the right by more than 10 percent B. Increase the quantity supplied by more than 10 percent C. Increase the quantity supplied by less than 10 percent D. Shift the supply curve to the right by less than 10 percent 2.The capacity of the stadium for the local baseball team, the...

Which is inconsistent with an elastic demand curve? A. The price-elasticity coefficient is less than 1...

Which is inconsistent with an elastic demand curve? A. The price-elasticity coefficient is less than 1 B. Total revenues fall when prices rise C. Buyers are relatively sensitive to price changes D. The relative change in quantity exceeds the relative change in price

Assume that the demand for Starbucks coffee is elastic. Should Starbucks increase or decrease the price...

Assume that the demand for Starbucks coffee is elastic. Should Starbucks increase or decrease the price of their coffee in order to bring in more total revenue. Please explain your answer

How a more or less elastic import demand curve, as well as a more or less...

How a more or less elastic import demand curve, as well as a more or less elastic export supply curve, determines who carries the main burden of a tariff – the importing consumers or the exporting suppliers?

QUESTION 7 Would demand for a cup of coffee be more or less elastic than demand...

QUESTION 7 Would demand for a cup of coffee be more or less elastic than demand for a cup of Starbucks brand coffee? Why? Demand for coffee in general would be less elastic than demand for Starbucks coffee because Starbucks coffee is known for being very strong and thus its customers are very loyal. Demand for coffee in general would be less elastic than demand for Starbucks coffee because while there are few close substitutes for coffee (perhaps tea or...

The demand for salt is price inelastic and the supply of salt is price elastic. The...

The demand for salt is price inelastic and the supply of salt is price elastic. The demand for caviar is price elastic and the supply of caviar is price inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of these taxes will be paid by the _________ of salt and the ________ of caviar....

7- If demand is , a price cut the total revenue. elastic; increases unit elastic;...

7- If demand is ________, a price cut ________ the total revenue. elastic; increases unit elastic; decreases inelastic; increases inelastic; does not change 5- Samantha was willing to pay $10 for a hamburger because she was hungry but she only paid $2.50. What is the consumer surplus Samantha gained from the hamburger? $2.50 $7.50 $10.00 $12.50 9- When the price rises, the firms' producer surplus ________. When the price falls, the firms' producer surplus ________. increases; decreases decreases; increases decreases;...

Say good X tends to be a relatively price-elastic good (demand is more price elastic than...

Say good X tends to be a relatively price-elastic good (demand is more price elastic than supply). Say the government imposes an excise tax on every unit of X buyers buy. The burden of this tax will probably fall more heavily on: sellers (gas stations) hard to say both sellers and buyers equally buyers

Suppose the price elasticity of demand 1.15 If so, then the demand for cereal is elastic...

Suppose the price elasticity of demand 1.15 If so, then the demand for cereal is elastic or inelastic. In another example, assume the price elasticity of demand for a particular magazine is negative .1.16 The demand for the magazine is inelastic. or . • Elastic

The more price elastic is the demand for a good or service, the higher will be...

The more price elastic is the demand for a good or service, the higher will be the acutal margin. Do you agree with this statement? Explain.

Question