Please inform me why the wrong answers are wrong :)))))) (1) Demand is said to b
ID: 1166103 • Letter: P
Question
Please inform me why the wrong answers are wrong:))))))
(1)
Demand is said to be inelastic if (Answer is C)
a. buyers respond substantially to changes in the price of the good.
b. demand shifts only slightly when the price of the good changes.
c. the quantity demanded changes only slightly when the price of the good changes.
d. the price of the good responds only slightly to changes in demand.
(2)Which of the following is not a determinant of the price elasticity of demand for a good? (answer:b)
a. the time horizon
b. the steepness or flatness of the supply curve for the good
c. the definition of the market for the good
d. the availability of substitutes for the good
(3) When studying how some event or policy affects a market, elasticity provides
information on the (answer: d)
a. change in the costs of production.
b. tradeoff between equality and efficiency.
c. effect on the budget deficit or surplus.
d. direction and magnitude of the effect.
Explanation / Answer
ANswer 1)
Demand is said to be inelastic when change in quantity demanded is minimal with respect to change in price
Hence option C is correct response here
Answer 2)
Finding Price elasticity of demand doesnt need the slope of Supply curve hence steepness or flatness of supply curve should not matter while calculating price elasticity of demand.
Time horizon is required to learn the changes in price and quantity, Type of markets and availability of substitutes and complements is needed
Option B is correct answer
Ans 3)
Elasticity tells us about how the market will behave and helps to quantify the effect on market therefore elasticity provides an information about direction and magnitude of effect
Option D is correct response