BECO Exam 2

If a 16 percent increase in price for a good results in a 7 percent decrease in quantity demanded, the price elasticity of demand is (please use the Algebraic Point formula and insert your solution as a positive number)

.4375 7/16=.4375 because 7 is the change in quanitity demanded/ the change in price

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a (please use the Algebraic Point formula)

50.00 percent decrease in the quantity demanded 5 * 10% = 50%

When the price of candy bars is $1.20, the quantity demanded is 490 per day. When the price falls to $1.00, the quantity demanded increases to 500. Given this information, we know that the demand for candy bars is (please use the Midpoint formula)

Inelastic (500-490)/ ((.5)500+490))= 10/495= .0202 (1-1.20)/((.5)1+1.20)= -.2/1.1= -.1818 .0202/-.1818= -.1111 |-.1111|= .1111 .1111<1 Therefore, inelastic.

Refer to the above table. If the price falls from $160 to $120, the price elasticity of demand is (please use the Midpoint formula and insert your solution as a positive number)

Price Q. Demanded 160 30 120 60 Midpoint Formula (30-60)/((.5)30+60) -30/45= -.6667 Qd (160-120)/((.5)160+120) 40/140=.2857 -.6667/.2857

Goods with many close substitutes tend to have

more elastic demands