ECON 2100 - Ch. 5 HW with
complete verified solutions
equal to 1, price - answer Unit-elasticity is when the price elasticity of
demand is ______ to __. Unit elasticity describes the scenario where a change
in the ____ of a product leads to proportional change in quantity demanded.
---------- If a 10% decrease in price leads to a 10% increase in quantity
demanded, demand is unit-elastic.
less than 1, sensitive to changes in price, - answer Inelastic demand occurs
when the price of elasticity is ___ than __. This occurs when buyers are not
very __________ to ________ in _______.
---------- Gasoline is an example of a good that has inelastic demand.
greater than 1, greater, sensitive to changes in price - answer Elastic
demand occurs when the price elasticity of demand is ________ than __.
Keeping in mind the above equation, demand is elastic when the percentage
change in quantity demanded is ________ than the percentage change in
price. Buyers are ____________ to _________ in _______ when demand is elastic.
Price elasticity of Demand - answer a measure of the responsibilities of the
quantity demanded of a good to a change in its price (how sensitive are we)
(%∆Qd) / (%∆P)
Midpoint method - answer (New - Old / (New + Old / 2)) X 100
b - answer Determine which statement about the absolute value of the price
elasticity of demand is correct.
a) The price elasticity of demand for laundry detergent in general is likely to
be greater than the price elasticity of demand for Gain laundry detergent.
, b) The price elasticity of demand for Gain laundry detergent is likely to be
greater than the price elasticity of demand for laundry detergent in general.
c) The price elasticity of demand for gasoline is greater than the price
elasticity of demand for cereal because because more people eat cereal than
use gasoline.
d) The price elasticity of demand for gasoline is less than the price elasticity
of demand for cereal because because more people eat cereal than use
gasoline.
greater, non-durable goods - answer elasticity tends to be ____________ over
the long-run for non-durable goods
responsiveness, longer, quantity demanded, longer, shape, horizontal,
vertical - answer Elasticity measures the________________ of quantity
demanded to changes in price. Due to the greater ability to find substitutes
over______ periods of time, customers will be better able to substitute away
from relatively more expensive goods by reducing their ________
_____________. Therefore demand tends to be _____ elastic over longer time
periods than over shorter time periods.
- The relative elasticity is reflected in the _____ of the demand curve: the
relatively more elastic demand curve looks more like a ___________ line, and
the less elastic demand curve more like a __________ line.
? - answer In this case the monthly demand curve is steeper and the yearly
demand curve is flatter. Elasticity determines the relationship between price
changes and total revenue, linking pricing decisions with elasticity. Elastic
demand results in an inverse relationship between price movements and
total revenue. If demand is elastic a price increase causes total revenue to
fall. Inelastic demand results in a direct relationship between price changes
and total revenue changes. When demand is inelastic an increase in price
will increase total revenue.
b - answer Penny is a consumer with a tight budget. The share of her budget
spent on goods and services is significant in determining how well she is able
to respond to price changes. Based on this criteria, for which of the following
goods would you expect Penny\'s demand to be the most elastic.
complete verified solutions
equal to 1, price - answer Unit-elasticity is when the price elasticity of
demand is ______ to __. Unit elasticity describes the scenario where a change
in the ____ of a product leads to proportional change in quantity demanded.
---------- If a 10% decrease in price leads to a 10% increase in quantity
demanded, demand is unit-elastic.
less than 1, sensitive to changes in price, - answer Inelastic demand occurs
when the price of elasticity is ___ than __. This occurs when buyers are not
very __________ to ________ in _______.
---------- Gasoline is an example of a good that has inelastic demand.
greater than 1, greater, sensitive to changes in price - answer Elastic
demand occurs when the price elasticity of demand is ________ than __.
Keeping in mind the above equation, demand is elastic when the percentage
change in quantity demanded is ________ than the percentage change in
price. Buyers are ____________ to _________ in _______ when demand is elastic.
Price elasticity of Demand - answer a measure of the responsibilities of the
quantity demanded of a good to a change in its price (how sensitive are we)
(%∆Qd) / (%∆P)
Midpoint method - answer (New - Old / (New + Old / 2)) X 100
b - answer Determine which statement about the absolute value of the price
elasticity of demand is correct.
a) The price elasticity of demand for laundry detergent in general is likely to
be greater than the price elasticity of demand for Gain laundry detergent.
, b) The price elasticity of demand for Gain laundry detergent is likely to be
greater than the price elasticity of demand for laundry detergent in general.
c) The price elasticity of demand for gasoline is greater than the price
elasticity of demand for cereal because because more people eat cereal than
use gasoline.
d) The price elasticity of demand for gasoline is less than the price elasticity
of demand for cereal because because more people eat cereal than use
gasoline.
greater, non-durable goods - answer elasticity tends to be ____________ over
the long-run for non-durable goods
responsiveness, longer, quantity demanded, longer, shape, horizontal,
vertical - answer Elasticity measures the________________ of quantity
demanded to changes in price. Due to the greater ability to find substitutes
over______ periods of time, customers will be better able to substitute away
from relatively more expensive goods by reducing their ________
_____________. Therefore demand tends to be _____ elastic over longer time
periods than over shorter time periods.
- The relative elasticity is reflected in the _____ of the demand curve: the
relatively more elastic demand curve looks more like a ___________ line, and
the less elastic demand curve more like a __________ line.
? - answer In this case the monthly demand curve is steeper and the yearly
demand curve is flatter. Elasticity determines the relationship between price
changes and total revenue, linking pricing decisions with elasticity. Elastic
demand results in an inverse relationship between price movements and
total revenue. If demand is elastic a price increase causes total revenue to
fall. Inelastic demand results in a direct relationship between price changes
and total revenue changes. When demand is inelastic an increase in price
will increase total revenue.
b - answer Penny is a consumer with a tight budget. The share of her budget
spent on goods and services is significant in determining how well she is able
to respond to price changes. Based on this criteria, for which of the following
goods would you expect Penny\'s demand to be the most elastic.
