If a 1% change in the price of a good causes a 1% change in the quantity demande
ID: 1216444 • Letter: I
Question
If a 1% change in the price of a good causes a 1% change in the quantity demanded, the good has an elasticity of demand: greater than 1. less than 1. equal to 1. equal to 0. Sandra consumes two goods-tea and coffee. Her demand for tea is inelastic while her demand for coffee is elastic. If there is an increase in the price of both tea and coffee. Sandra's revenue on both tea and coffee is likely to decrease Sandra's expenditure on coffee will increase and her expenditure on tea will decrease Sandra's expenditure on both tea and coffee is likely to increase Sandra's expenditure on tea will increase and her expenditure on coffee will decrease If a good has a price elasticity of demand of -3, it implies that. If the price of the good increases by 1%, the quantity demanded of the good will decrease by 3%. If the income of the consumer increases by 3%, the quantity demanded of that good will increases by 1%. If the price of the good increases by 3%, the quantity demanded of the good will increase by 1%. If the income of the consumer increases by 1%, the quantity demanded of that good will increase by 3%.Explanation / Answer
30. If a1% change in price of the good causes 1% change in the quantity demanded the good has an elasticity of demand- equal to 1. EXPLANATION- The price elasticity of demand is equal to the percentage change in quantity demanded divided by the percentage change in price.
31. Sandra consumes two goods tea and coffee. HEr demand for tes is inelastic while her demand for coffee is elastic. If there is an increase in the price of both tea nad coffee- Sandra's expenditure on coffe will increase and her expenditure on tea will decrease.
32. If a good has a price elasticity of demand of -3. It implies- If the price of the good increases y 1% the quantity demanded of the good will decrease by 3%.
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