True or False? 1. Price elasticity of demand is the percentage change in price divided by the...
Question:
True or False?
1. Price elasticity of demand is the percentage change in price divided by the percentage change in quantity demanded.
2. If the price of a good goes up by 20 percent and the quantity demanded falls by 40 percent, the price elasticity of demand is 2.
3. If the price of corn goes up by $1 a bushel and the quantity supplied rises by 100 bushels, the price elasticity of supply has to be 100.
4. When demand is perfectly inelastic, there is no change in quantity demanded following a change in price.
Price Elasticity of Demand:
Price elasticity of demand measure the responsiveness of consumers to a change in price. It is the percentage change in quantity demanded divided by the percentage change in price.
Answer and Explanation: 1
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The answer to 1. is false.
Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. The...
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Price Elasticity of Demand in Microeconomics
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Chapter 2 / Lesson 14
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In microeconomics, the principle of price elasticity of demand is important to understand. Learn the definition of price elasticity of demand, understand the formula and its categories, and see some calculation examples.
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