PRIN OF MICROECONOMICS
2nd Edition
ISBN: 9780393914085
Author: coppock
Publisher: Norton, W. W. & Company, Inc.
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Question
Chapter 4, Problem 1QR
To determine
Explain the price
Expert Solution & Answer
Explanation of Solution
The percentage change in the quantity demanded of a product due to the percentage change in its price known as price elasticity. Thus, the sensitiveness or responsiveness of
As Equation 1 shows, the price elasticity of demand tells us exactly how quantity demanded responds to a change in price. Generally, the value of price elasticity is negative. However, economists just to look at price elasticity of demand as an absolute value. That means, the price elasticity of demand is always expressed as a positive number.
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- What does a price elasticity of demand of 0.39 mean?arrow_forwardThe price elasticity of demand for personal computers is estimated to be 2.2. If the price of personal computers declines by 20 percent, what will be the expected percentage increase in the quantity of computers sold?arrow_forwardOn Tuesday, the price and quantity demanded are 7 and 120 units, respectively. Ten days later, the price and quantity demanded are 6 and 150 units, respectively. What is the price elasticity of demand between the 7 and 6 prices?arrow_forward
- Suppose a movie theater raises the price of popcorn 10 percent, but customers do not buy any less popcorn. What does this tell you about the price elasticity of demand? What will happen to total revenue as a result of the price increase?arrow_forwardUsing the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.arrow_forward
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