Question

1) To determine the price elasticity of demand for donuts in Denver, we compare the percentage change in the

A) demand for donuts with the percentage change in the price of donuts.

B) quantity of donuts demanded in Denver with the percentage change in price in Denver.

C) demand for donuts in Denver with the percentage change in income in Denver.

D) price of donuts in Denver with the percentage change in the price of coffee in Denver.

E) equilibrium price in Denver with the percentage change in demand in Denver.

2) The price elasticity of demand measures the ____ that results from a ____.

A) change in quantity demanded; change in price

B) change in price; change in the quantity demanded

C) percentage change in price; percentage change in the quantity demanded D) percentage change in the quantity demanded; percentage change in price E) percentage change in the quantity demanded; change in price

3) Suppose the local university charges $85 per credit hour. If tuition increases from $85 to $93 per credit hour, using the midpoint method, what is the percentage change in price?

A) 8.99 percent B) 8.00 percent C) 9.41 percent D) 8.62 percent E) 9.12 percent

4) Using the midpoint method, if the price of an airline ticket from Orlando to Pittsburgh falls from $275 to $238, the percentage change in price is

A) 1442 percent. B) 14.42 percent. C) 15.54 percent. D) 13.45 percent. E) 68.00 percent.

5) If the demand for a good is elastic, then

A) people do not change the quantity they demand when the price of the good changes.

B) a change in price leads to a smaller percentage change in the quantity demanded.

C) people substantially decrease the quantity of the good they buy if its price increases by a small percentage. D) a change in the quantity demanded is smaller than the change in price.

E) the quantity demanded divided by the price exceeds 1.00.

6) When the percentage change in the quantity demanded exceeds the percentage change in price, then demand is

A) inelastic.

B) unit elastic. C) elastic.

D) irrelevant. E) undefined.

7) Suppose the Chicago Enforcers football team lowers ticket prices by 13 percent and as a result the quantity of tickets demanded increases by 21 percent. This response means that the demand for Enforcer tickets is

A) inelastic.

B) elastic.

C) unit elastic.

D) perfectly inelastic. E) perfectly elastic.

8) If the price elasticity of demand for moose hunting lessons is 4.23, then the demand for moose hunting lessons is

A) elastic.

B) unit elastic.

C) inelastic.

D) perfectly unit elastic. E) perfectly elastic.

9) When the percentage change in the quantity demanded is less than the percentage change in price, then demand is

A) inelastic.

B) unit elastic. C) elastic.

D) irrelevant. E) undefined.

10) If the price elasticity of demand for razors is 0.32, the demand for razors is

A) elastic.

B) unit elastic.

C) inelastic.

D) perfectly inelastic. E) perfectly elastic.

Answer 1

1.Price elasticity of demand for a commodity is defined as the percentage change in demand for the commodity divided by the percentage change in its price.Thus to determine the price elasticity of demand for donuts in Denver, we compare the percentage change in the  quantity of donuts demanded in Denver with the percentage change in price in Denver.

2.The definition of price elasticity of demand itself tell us that it measures the percentage change in demand that results from a percentage change in price.

3.Mid point formula to find percentage change in price is P₂-P₁ /.5(P₁₊P₂₎/100

=93-85/.5(85+93) X 100

=8/89 X 100

=8.99%

4.Mid point formula to find percentage change in price is P₂-P₁/.5(P₁₊P₂₎/100

=238-275/.5(275+238) X 100

=37/256.5 X 100

=14.42%

5.Elastic demand refers to the point that for a slight change in price there is a huge change in demand and the quantity demanded divided by the price exceeds 1.

6.Elastic demand refers when percentage change in demand is greater than percentage change in price.

7.As price change is less and demand change is more demand for Enforcer tickets is elastic.

8. If the price elasticity of demand for moose hunting lessons is 4.23, then the demand for moose hunting lessons is elastic.

9.Inelastic demand is when the percentage change in the quantity demanded is less than the percentage change in price, then demand.

10.Perfectly inelastic demand is one in which the change in price causes no no change in the quantity demanded.E_d=0.

As  the price elasticity of demand for razors is 0.32, the demand for razors is perfectly inelastic.