Question

D=250-0.5Q

1.What can you say about the demand as the price increases from $150 to $200? *   

a.Elastic.

b.Inelastic.

c.Unit elastic.

d.Perfectly inelastic

2.Which of the following is a determinant of price elasticity of demand? *

a.Availability of close substitutes.

b.Income.

c.Nature of commodity.

d.All of the above.

3.What is the quantity demanded at price $150? *

a.175.

b.200.

c.100.

d.Cannot be determined.

4.What is the price at quantity demanded 100? *

a.$300.

b.$100.

c.$200.

d.Cannot be determined.

5.What is the price elasticity of demand as price increases from $150 to $200? *

a.-1.

b.-2.

c.-2.3.

d.-1.5.

Answer 1

2) if there are no available close substitute then the demand would be elastic in nature because an increase in price can shift the quantity demanded more proportionately to the other substitute and also the nature of the commodityalso determines the elasticity where is the commodity is necessity like food then it will be inelastic and if it is a luxury good it will be elastic and similarly the elasticity also depends on income where at high income levels the demand for goods can be more elastic.

Therefore (d) all the above is the answer to this question