1.The price of product Z decreased from $2.50 per unit to 2.00 per unit.  Since the price decreased, demand has gone up from 3 million units to 4 million units.  Calculate the price elasticity of demand and determine if the demand is elastic or inelastic.

        Price elasticity of demand             Elasticity

A)         -1.29                                inelastic

B)         -2.00                                inelastic

C)         -2.00                                 elastic

D)          -1.29                               elastic

A)   -0.10.

B)   -2.00.

C)   Elastic.

D)   -0.50.

3.If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in a:

A)   4% decrease in the quantity demanded.

B)   10% decrease in the quantity demanded.

C)   40% percent decrease in the quantity demanded.

D)   400% percent decrease in the quantity demanded.

4.If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in a:

A)   4% decrease in the quantity demanded.

B)   10% decrease in the quantity demanded.

C)   40% percent decrease in the quantity demanded.

D)   400% percent decrease in the quantity demanded.

5.If the price of a candy bar increases from $0.50 to $0.55 and the quantity demanded decreases from 267 to 235, the price elasticity of demand is:

A)   -1.23.

B)   1.23.

C)   -1.34.

D)   1.34.

答案和详解如下：

1.The price of product Z decreased from $2.50 per unit to 2.00 per unit.  Since the price decreased, demand has gone up from 3 million units to 4 million units.  Calculate the price elasticity of demand and determine if the demand is elastic or inelastic.

        Price elasticity of demand             Elasticity

A)         -1.29                                inelastic

B)         -2.00                                inelastic

C)         -2.00                                 elastic

D)          -1.29                               elastic

The correct answer was D)

percentage change in quantity = [(4 - 3)] / [(4 + 3) / 2] = 1 / 3.5 = .286 = 28.6 %

percentage change in price = [(2 - 2.5)] / [(2 + 2.5) / 2] = -0.5 / 2.25 = -0.222 = -22.2 %

28.6 % / -22.2 % = -1.29

Since the price elasticity of demand is greater than 1 (ignore the sign), product Z is elastic

2.If the number of widgets demanded changes from 51 to 49 when the price changes from $4 to $6, the price elasticity of demand is:

A)   -0.10.

B)   -2.00.

C)   Elastic.

D)   -0.50.

The correct answer was A)

Price elasticity of demand is calculated by dividing the percent change in quantity demanded by the percent change in price, using the average value of the variable in the computations. The percent change in quantity demanded is (51 – 49) / ((51 + 49) / 2) = 0.04. The percent change in price is (4 – 6) / (4 + 6) / 2 = -0.40. The price elasticity of demand is 0.04 / -0.4 = -0.10.

3.If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in a:

A)   4% decrease in the quantity demanded.

B)   10% decrease in the quantity demanded.

C)   40% percent decrease in the quantity demanded.

D)   400% percent decrease in the quantity demanded.

The correct answer was C)

Price elasticity of demand = (% change in Q demanded/% change in price). Given the price elasticity of demand and the percentage change in price, we can solve for the percentage change in Q demanded.

4.If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in a:

A)   4% decrease in the quantity demanded.

B)   10% decrease in the quantity demanded.

C)   40% percent decrease in the quantity demanded.

D)   400% percent decrease in the quantity demanded.

The correct answer was C)

Price elasticity of demand = (% change in Q demanded/% change in price). Given the price elasticity of demand and the percentage change in price, we can solve for the percentage change in Q demanded.

5.If the price of a candy bar increases from $0.50 to $0.55 and the quantity demanded decreases from 267 to 235, the price elasticity of demand is:

A)   -1.23.

B)   1.23.

C)   -1.34.

D)   1.34.

The correct answer was C)    

Price elasticity of demand is calculated by dividing the percent change in quantity demanded by the percent change in price, using the average value of the variable in the computations. The percent change in quantity demanded is (235 - 267) / [(235 + 267) / 2] = -32/251 = -0.127 or -12.7%. The percent change in price is = (0.55 - 0.50) / [(0.55 + 0.50) / 2] = 0.05 / 0.525 = .095 or 9.5%. The price elasticity of demand is -12.7 / 9.5 = -1.34.