econ II
if the price elasticity of demand for a good is -0.4, then a 10% increase in price results in a
4% change in the quantity demanded
if the price elasticity of demand for a good is -4.0, then a 10% increase in price results in a
40% decrease in the quantity demanded
Goods with many close substitutes tend to have
More elastic demnads
For a good that is a necessity
demand tends to be inelastic
Demand is elastic if elasticity is
greater than 1 in absolute value
Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is
inelastic and equal to -0.67
the price elasticity of demand for eggs
is computed as the percentage change in quantity demanded of eggs divided by the percentage change in price of eggs.
if the price of natural gas rises, when is the price elasticity of demand likely to be the highest?
one year after the price increase
The price elasticity of demand measures how much
quantity demanded responds to a change in price.
The flatter the demand curve through a given point, the
the greater the price elasticity of demand at that point