Draw the demand curve for a good with a price elasticity of demand equal to 0. What can you say about substitutes available to the consumer for this good?
Ans) Price elasticity of demand is the responsiveness of quantity demanded to change in price. If PED is zero, that means good is Perfectly inelastic. That is, quantity demanded will not change with change in price.
When good is Perfectly inelastic, there is no (or very little) substitutes are available for that product and also that product is quite a necessity. Therefore, people will have no choice but to buy that good or service, despite the increase in price.
Draw the demand curve for a good with a price elasticity of demand equal to 0....
The price elasticity of demand for a good produced by a monopolist O A. equals zero as long as the good has no close substitutes. O B. does not equal zero because every good has at least one good substitute for it. C. is always inelastic since the demand curve slopes down. O D. does not equal zero because there will always be some substitutes, however imperfect they may be.
All other things being equal, the __________ substitutes for a good, the __________ the price elasticity of demand.
The price elasticity of demand is equal to the percentage change in price divided by the percentage change in quantity demanded the change in quantity demanded divided by the change in price. the value of the slope of the demand curve. the percentage change in quantity demanded divided by the percentage change in price If 20 units are sold at a price of US$50 and 30 units are sold at a price of US$40, what is the absolute value of...
The price elasticity of demand for an industry’s demand curve is equal to –0.3 for the range of prices over which supply increases. If total industry output is expected to increase by 12 percent as a result of the supply increase, managers in this industry should expect the market price of the good to _________(increase, decrease) by ______ percent. Select one: a. Increase by 8% b. Decrease by 40% c. Decrease by .8% d. Increase by 36%
5. The cross-price elasticity of demand between good A and good B is -1.4. These goods are: A. Complements B. Substitutes C. Unrelated Goods D. Inelastic Goods 6. Income elasticity of demand for streaming video is 0.5, which indicates that streaming video is a: A. Normal good B. Inferior good C. Not good D. Can't say for sure 7. When the price of sriracha increases by 15%, you observe quantity supplied increase by 25%. Elasticity of supply is: A. 0.6...
If the income elasticity of demand for a good is negative, then the good must be an inferior good. True False Question 2 The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises. True False Question 3 A price ceiling set above the equilibrium price is not binding. True False Question 4 The cross-price elasticity of garlic salt...
Exercise 4.1: Price Elasticity of Demand The price of a good is $200, and the quantity demanded is 2,000. The price elasticity of demand is-1.25. If the price changes to $204, what is the new quantity demanded? Exercise 4.2: Income Elasticity of Demand A consumer's income is $40,000, and the quantity demanded of a good is 2,000. The income elasticity of demand is +0.60. If the consumer's income changes to $41,000, what is the new quantity demanded? Exercise 4.3: Income...
Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand: The availability of close substitutes . Whether the good is a necessity or a luxury How broadly you define the market . The time horizon being considered A good with many close substitutes is likely to have relatively _______ demand, since consumers can easily choose to purchase one of the close substitutes if the price of the good rises A good's price elasticity of demand depends in part on how necessary...
9. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand: The availability of close substitutes Whether the good is a necessity or a luxury How broadly you define the market . The time horizon being considered A good with many close substitutes is likely to have relatively _______ demand, since consumers can easily choose to purchase one of the close substitutes if the price of the good rises. A good's price elasticity of demand depends in part on how necessary...
5. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand: • The availability of close substitutes • Whether the good is a necessity or a luxury • How broadly you define the market • The time horizon being considered A good with many close substitutes is likely to have relatively __(Elastic, Inelastic)___ demand since consumers can easily choose to purchase one of the close substitutes if the price of the good rises. A...