Pls solve them all ... so i can give you like . Introduction to Micro Economics
ID: 1114476 • Letter: P
Question
Pls solve them all ... so i can give you like .Introduction to Micro Economics Midterm 2 Dr: Roubhris aine ID: I/ Which of the following is not characteristic of the demand for a commodity that is elastic? A. The relative change in quantity demanded is greater than the relative change in price B. Buyers are relatively sensitive to price changes. C. Total revenue declines if price is increased. D. The elasticity coefficient is less than one. 2/ The price elasticity of demand for widgets is 0.80. Assuming no change in the demand curve for widgets, a 16 percent increase in sales implies a: A. 1 percent reduction in price. B. 12 percent reduction in price. C. 40 percent reduction in price D. 20 percent reduction in price. 3/ The price elasticity of demand is generally A. negative, but the minus sign is ignored. B. positive, but the plus sign is ignored. C. positive for normal goods and negative for inferior goods. D. positive because price and quantity demanded are inversely related. 4/ Suppose we find that the price elasticity of demand for a product is 3.5 when its price is increased by 2 percent. We can conclude that quantity demanded: A. increased by 7 percent. B. decreased by 7 percent. C. decreased by 9 percent. D. decreased by 1.75 percent. 5/ Which of the following statements is not correct? A. If the relative change in price is greater than the relative change in the quantity demanded associated with it, demand is inelastic. B. In the range of prices in which demand is elastic, total revenue will diminish as price decreases. C. Total revenue will not change if price varies within a range where the elasticity coefficient is unity D. Demand tends to be elastic at high prices and inelastic at low prices.
Explanation / Answer
1. The right answer is option D.
Explanation: In case of elastic demand, the % change in demand is higher than the % change in price. So, the absolute value (i.e. ignoring the minus sign) of elasticity of demand is greater than 1. So, the elasticity coefficient is more than 1. Inelastic demand, consumers are relatively more responsive to price changes as they change quantity demanded proportionately more than the change in price. In case of elastic demand, revenue decreases when the price is increased.