each of the terms to their formula. %AQd А. %AI %AQdj В. %AP - Cross-Price Elasticity Q1- Q2 Q + Q2 2 P-P2 P+P2 - Income Elasticity v Price Elasticity of Demand (Mid-Point Version) C. v Price Elasticity of Demand (Actual Definition) %AQx D. %AP, ave and Submit to save and submit, Click Saue d 1

Using data on automobile purchases, P. McCarty (REStat 1996) estimated the following elasticities for compact cars sold in the United States. Own elasticity of demand Income Elasticity Cross Price* - 0.87 1.70 .82 * Responsiveness of demand for compact cars to changes in the price of other types of car models, such as luxury cars. а) What is the percent change in quantity demanded for compact cars given a 2 percent decrease in the price of compact cars? b) What is the percent change in demand for compact cars given a 2 percent decrease in the price of other car models? c) What is the percent change in demand for compact cars given a 2 percent decrease in income? d) Is demand for compact cars elastic or inelastic? Explain briefly. e) Would a decrease in the price of compact cars generate more or less revenue from the sale of compact cars? f) Are compact cars a normal or inferior good? Explain briefly. 5.

For the demand schedule shown below, what is the price elasticity of demand? Price Quantity Demanded $74 2,500 $80 1,800

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

Under the cross elasticity of demand between two complementary products___a) None of the above b) If the price of one product decreases, the demand for the other product will decrease. c) If the price of one product decreases, the demand for the other product will increase. d) If the price of one product increases, the demand for the other product will increase.

Total revenue is $25,000 if price is $10, but when price increases to $12, total revenue falls to $24,000. Use the midpoint formula to calculate the price elasticity of demand between $10 and $12. (keep your answer positive and keep 2 decimal point if applicable)

The subway fare in your town has just been increased from 50 cents to $1.00 per ride. As a result, the transit authority notes a decline in ridership of 30 percent. What is the price elasticity of demand for subway rides? –0.45 0.45 2.22 –2.22

The price elasticity of demand measures which of the following?         how responsive the quantity demanded is to changes in price         the percentage-slope of the demand curve     the slope of the demand curve based on price       the rate at which demand changes when price changes

The cross-price elasticity of demand measures elasticity of demand at the intersection of the supply and demand curves the relative elasticity of supply and demand at the intersection of the two curves the relationship between the quantity demanded for one good and the price of another the relationship between the demand for one good and the supply of another

If the price rises from £4 to £5 and the quantity demanded falls from 100 to 75 then the price elasticity of demand is: