Homework Answers
Answer-4 The correct option is d.) A 50 percent decrease in the quantity demanded
Price elasticity of demand
=%age change in quantity demanded/ %age change in price
5= %age change in quantity demanded/ 10
%age change in quantity demanded = 50%
There exists an inverse relationship between quantity and price. Price will increase and quantity will decrease
Answer-5 The correct option is c.) There will be an 80% reduction in packs of cigarettes sold.
Price elasticity of supply
= %age change in quantity supplied/ %change in price
0.8= %age change in quantity supplied/[(15-5)/10]
Thus, %age Change in quantity supplied = 80%
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