Answered: 1. The price elasticity of demand for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The price elasticity of demand for bread is computed as the percentage change in quantity being demanded with respect to the percentage change in price. Hence, option A is correct.

When there is a new product that is a close substitute for bread, the price elasticity of demand for bread would be higher. Hence, option B is correct.

When the bread is considered to be a necessity good, the price elasticity of demand for bread would be higher. Hence, option C is correct.

Hence, the correct option is D.

1. The price elasticity of demand for bread
A.
is computed as the percentage change in quantity demanded of bread divided by the percentage change
in price of bread.
B. will be higher if there is a new product that is a close substitute for bread.
C. will be higher if consumers consider bread to be a necessity.
D. All of the above are correct.
E. A and B, only

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