Q16. If the price elasticity of demand is 1.5 and a change in the price of the product increases the quantity demanded by 4%, then what is the percent change in price?

A)      +2.667%.

B)      –0.375%.

C)      −2.667%.

Q17. If the price elasticity of demand for a good is 4.0, then a 10% increase in price would result in a:

A)   4% decrease in the quantity demanded.

B)   10% decrease in the quantity demanded.

C)   40% decrease in the quantity demanded.

Q18. 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 respective price elasticity of demand and determine the elasticity of demand.

A)   −1.29; elastic.

B)   −1.29; inelastic.

C)   −2.00; elastic.

Q19. 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)   Elastic.

B)   -2.00.

C)   -0.10.

答案和详解如下：

Q16. If the price elasticity of demand is 1.5 and a change in the price of the product increases the quantity demanded by 4%, then what is the percent change in price?

A)      +2.667%.

B)      –0.375%.

C)      −2.667%.

Correct answer is C)

Price elasticity of demand is calculated by dividing the percent change in quantity demanded by the percent change in price. The percent change in price is, therefore, the percent change in quantity demanded divided by the price elasticity of demand = 4 / 1.5 = 2.667.

Because of the inverse relationship between quantity demanded and price, the price elasticity is always going to be negative although economists usually ignore the negative sign and just use the absolute value.  To properly predict the price change a negative sign needs to be added to the price elasticity before the calculation or to the answer after the calculation. 

Using the latter case, the 2.667% will become -2.667%, showing that an increase in quantity demanded of 4% will cause a decrease in the price of 2.667% when the price elasticity is 1.5 (-1.5).

Q17. If the price elasticity of demand for a good is 4.0, then a 10% increase in price would result in a:

A)   4% decrease in the quantity demanded.

B)   10% decrease in the quantity demanded.

C)   40% decrease in the quantity demanded.

Correct answer is 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.

Q18. 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 respective price elasticity of demand and determine the elasticity of demand.

A)   −1.29; elastic.

B)   −1.29; inelastic.

C)   −2.00; elastic.

Correct answer is A)

percentage change in quantity = [(4 − 3)] / [(4 + 3) / 2] = 1 / 3.5 = 0.286 = 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

Q19. 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)   Elastic.

B)   -2.00.

C)   -0.10.

Correct answer is 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 (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.

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