quiz 3.6

If a good has a price elasticity of demand of - 3, it implies that:

if the price of the good increases by 1%, the quantity demanded of the good will decrease by 3%.

Higher price elasticity of demand means that a consumer's demand is:

more responsive to price changes.

If the demand for a steak is unit elastic, then

the percentage change in quantity demanded is equal to the percentage change in price.

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is - 3, then quantity demanded

will decrease by 45 percent

Which of the following goods is likely to have the highest price elasticity of demand? A. Pizza B. Gasoline C. Salt D. Life-Saving Drugs

A

Which of the following is the formula to calculate arc elasticity of demand?

Arc elasticity of demand = [(Q2 - Q1) / (Q2+ Q1)/2] / [(P2 - P1) / (P2 + P1)/2]

When there are more substitutes for a product, the ________ for the product is ________.

demand; more price elastic

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then

the demand for aspirin is inelastic.

If the demand for cell phone service is inelastic, then

the percentage change in quantity demanded is less than the percentage change in price (in absolute value).

Elasticity is:

the ratio of the percentage change in two variables.