from 200 units to 180 units, the price elasticity of demand is: B) 0.47. D) 0.4
ID: 1106962 • Letter: F
Question
from 200 units to 180 units, the price elasticity of demand is: B) 0.47. D) 0.4 33. If the price of Good X rises from $4 to S5, and the quantity demanded of Good X falls 34. A decrease in income causes demand for a normal good toand an increase in income causes demand for an inferior good to A) decrease; decrease B) increase; increase C) decrease; increase D) increase; decrease 35. If the price of Coca-Cola rises, ceteris paribus, we expect that the demand for Pepsi will A) increase. B) decrease. C) remain the same. D) change in an indeterminate direction. 36. Which of the following might explain why the price of DVD players has been falling? A) B) C) D) an increase in consumer income a decrease in the price of high-definition Blu-ray players a decrease in the price of DVDs an increase in the price of gasoline 3%7. If the cross-price lasicity of demand of two goods is negative, we can conclude that the two goods are: A) substitutes. B) complements C) normal goods. D) inferior goods. 38. If the demand curve is inelastic a price causes a(n) A) decrease; decrease B) decrease; increase C) increase; decrease D) There is not enough information to answer in revenues. Page 9Explanation / Answer
33) PE = (P1 + P2)/(Q1 + Q2) x (Q2 - Q1)/(P2 - P1)
PE = 9/380 x -20/1 = - 0.47 (Option B is correct)
34) Option A is correct (by definition)
35) Option A is correct (These goods are substitutes and have a positive cross price elasticity of demand)
36) Option B is correct (Blu-ray players are substitutes to DVD players and would cause a negative effect on demand when their price falls)
37) Option B is correct
Complements have a negative cross price elasticity of demand. (Increase in price of one good would lead to a decrease in the quantity demanded of the other good)
38) Option A is correct
If the demand curve is inelastic a price decrease causes a decrease in revenues. (quantity demanded doesn't increase by the same proportion and total revenue decreases)
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