Question

7. If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is O A. inelastic. OB. -1.25 O c. Both A and B above. OD. Neither A nor B above. 18. If the price of orange juice rises 10% and as a result the quantity demanded falls by B%, the price elasticity of demand for orange juice is O A. - 10.0. OB. -0.80. OC.-80.0. OD. -1.25 19. If a consumer doubles her quantity of ice cream consumed when her income rises by 25%, then her income elasticity of demand for ice cream is O A 25. OB. 08 O c. 4.0. OD 8.0 20. a good has an income elasticity of demand greater than one, one might classify that good as O A. a necessity OB. inelastic. O c. unusual OD a luxury 21. the supply curve for orange juice is estimated to be Q = 40 + 2p, then, at a price of $2, the price elasticity of supply is OA. 1. OB. 11. OC. 01. OD. 09. 22. If the price of product A increases by 10%, and the quantity demanded for product B drops by 50%, then these two products are A. substitutes OB. inferior goods. O c. complements OD. normal goods.

Answer 1

1) Elasticity = percentage change in demand/percentage change in price

= -8/10

= -0.8

Which is inelastic

option(A)

2) E = -8/10 = -0.8

Option(B)

3) Assuming intial quantity to be X and change =2x, Percentage change = 2x-x/x*100 = 100%

Income elasticity = 100/25 = 4

option(C)

4) If the income elasticity is greater than 1, the good is a luxury good

option(D)

As per HOMEWORKLIB RULES, four parts are answered