Assume that the demand for plastic surgery is price inelastic. Are the following

Question

Assume that the demand for plastic surgery is price inelastic. Are the following statements true or false? Explain your answer for full credit. When the price of plastic surgery increases, the number of operations decreases.

The percentage change in the price of plastic surgery is less than the percentage change in quantity demanded.

Changes in the price of plastic surgery do not affect the number of operations.

Quantity demanded is quite responsive to changes in price.

The marginal revenue of another operation is negative.

Explanation / Answer

Answers:

1). When the price of plastic surgery increases, the number of operations decreases ( False)

Reason: It is already given that plastic surgery is price inelastic, so this statement is false because when the price of plastic surgery increases, the number of operations decreases this shows that demand is elastic not inelastic.

2). The percentage change in the price of plastic surgery is less than the percentage change in quantity demanded.( False)

Reason: The above statement shows that demand is highly elastic because the percentage change in the price of plastic surgery is less than the percentage change in quantity demanded.

3). Change in the price of plastic surgery do not affect the number of operations ( true)

Reason: This statement is true because this statement shows that with a change in price , demand for plastic surgery does not change which shows that demand for plastic surgery is inelastic.

4). Quantity demanded is quite responsive to changes in price ( False)

Reason: This statement shows that demand is elastic because quantity demanded is quite responsive to changes in price which shows that demand is elastic, when there is a change in price, deamand also changes.

5). The marginal revenue of another operation is negative ( True)

Reason: If the demand is inelastic, then marginal revenue is negative.

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