ECS2601 ASSIGNMENT 1 2021 ANSWERS (YEAR SEMESTER)

ECS2601 ASSIGNMENT 1:2021
0763 468 675 (ECS TUTOR)




Microeconomics ECS 2601
Semesters 1 & 2
Department of Economics


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, SEMESTER 1

COMPULSORY ASSIGNMENT LEARNING UNITS 1 TO 7
01
UNIQUE NUMBER 540779

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Answer all questions on a mark-reading sheet


Questions 1 to 20 of the assignment are MULTIPLE-CHOICE questions.

In each question, select the most correct option.


1. What affects the price elasticity of demand for a good?


[1] Duration for demand decision.
[2] Substitutability of resources.
[3] Time elapsed since the income change.
[4] The closeness of substitutes.



Explanation- factors that affect how elastic (or inelastic) the price elasticity of demand is: the
availability of substitutes, the timeframe, the share of income, whether a good is a luxury vs. a
necessity, and how narrowly the market is defined.



2. The price elasticity of demand is inelastic if…


[1] income elasticity of demand is negative.
[2] price elasticity of demand is positive but less than 1.
[3] price elasticity of demand is negative.
[4] price elasticity of demand is positive but greater than 1.
Explanation: Price elasticity of demand (PED) shows the relationship between price and quantity
demanded and provides a precise calculation of the effect of a change in price on quantity
demanded.




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