MICRO elasticity

If the price of cell phones increases by 5% and the quantity demanded falls by 2%, the absolute value of the price elasticity of demand is

.4

If the price increases by 10% and the quantity demanded falls by 5%, the absolute value of the price elasticity will be

.5

Suppose university raises his tuition by 6% and as a result the enrollment of students decreases by 3%. The absolute value of the price elasticity of demand is

.5

Suppose the quantity demanded of ski boats fall from 4,000,000 to 3,000,000 as a result of an average price increase from $20,000 to $25,000 per boat. The absolute value of the price elasticity of demand is closest to

1.29

If the price of sandals increases by 10% and the quantity demanded falls by 20%, then the price elasticity of demand an absolute value is

2

For product X, the price elasticity of demand has an absolute value of 3.5. This means that quantity demanded will increase by

3.5% for each one percent decrease in price, ceteris paribus

If the price of the iPhone X falls by 3% and the price elasticity of demand for the iPhone X is 2.0, then quantity demanded will rise by what percentage

6%

If the price elasticity of demand is .6, then a 10% increase in the price of the good will lead to a ______ in the quantity demanded

6% decrease

Assume the price elasticity of demand for US frisbee code frisbees is .5. If a company increases the price of each frisbee from $12 to $16 the number of frisbees demanded will

Decrease by 14.3%

When demand is elastic the absolute number for price elasticity will be

Greater than 1

Price elasticity looks at

How much the quantity demanded or supplied changes after a change in price.

Price elasticity of demand refers to

How sensitive buyers are to a change in price.

Assume the price elasticity of demand for JT Chip Co. chips is 4.0. If the company decreases the price of each bag of chips from $1.89 to $1.49, the number of bags sold will

Increase by 95%

To find the percentage change in price

The change in price is divided by the average price

To find the average percentage change in quantity demanded

The change in quantity demanded is divided by the average quantity

If demand is elastic then

The elasticity number E is greater than 1

The basic formula for price elasticity of demand is

The percentage change in quantity demanded divided by the percentage change in price

If the elasticity of demand is 3 and the price rises by 15% then

The quantity demanded will fall by 45%

Technically, the elasticity number is negative because

When price falls, quantity demanded will rise, but for simplicity, economist take the absolute value of the elasticity number

Price elasticity of demand shows how

responsive the quantity demanded is to a change in price