### Understanding Price Elasticity of Demand**10. The price elasticity of demand for any good must be less than or equal to zero unless:** a. the good is a necessity. b. the good is a Giffen good. c. the good is a substitute. d. the good is a luxury. **Explanation:**This question deals with the price elasticity of demand, which measures how the quantity demanded of a good responds to changes in its price. Normally, most goods have a negative price elasticity of demand, implying that an increase in price leads to a decrease in quantity demanded. However, certain exceptions and categories can affect this relationship, which include:- **Necessities:** These are goods that are essential for survival or well-being. For necessities, the demand is generally inelastic since people will buy them regardless of price changes, but they still adhere to the rule of non-positive price elasticity in typical scenarios. - **Giffen Goods:** These are a rare type of goods where an increase in price leads to an increase in the quantity demanded, violating the typical law of demand. This phenomenon usually occurs when the good is an inferior good and its price increase makes the consumer unable to afford better substitutes, forcing them to buy more of the good despite the price rise. - **Substitutes:** Goods that can replace each other. For such goods, when the price of one good rises, consumers might switch to its substitutes. - **Luxuries:** These are high-end goods that are not necessary but are desired by consumers. Luxuries can have varying elasticities based on consumers' discretionary income.This question and its answer options help understand the unique cases in the concept of price elasticity in economics.#### Additional Note:The background of the image shows part of a MacBook Air with a visible keyboard. The keys and some application icons on the computer's screen are visible above the question text, indicating the context in which the question might have been reviewed or answered.

Price elasticity of demand is considered as ne of the significantly measure to analyse the…

10. The price elasticity of demand for any good must be less than or equal to zero inless a. the good is a necessity. b. the good is a Giffen good. c. the good is a substitute. d. the good is a luxury.

10. The price elasticity of demand for any good must be less than or equal to zero inless a. the good is a necessity. b. the good is a Giffen good. c. the good is a substitute. d. the good is a luxury.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Helllp
3. Suppose that as the income level increases by 10% that the quantity demanded of that same item increases by 6%. a. Calculate the income elasticity of demand. b. What two things does the value in a tell you about the good in question?
23. Price elasticity of demand for snowshoes has recently fallen from 3.2 to 1.8. Which of the following best explains this change? a. The price of snowshoes rose. b. Consumer incomes increased.y A number of new alternatives for snowshoes recently entered the market. d. The cost of producing snowshoes has increased. C.
When a good has an income elasticity of demand coefficient of 4.54 the _____. A. good is a normal good and it is income elastic B. good is a normal good and it is income inelastic C. good is an inferior good and it is income elastic D. good is an inferior good and it is income inelastic
2. If the price of Beer is $2 a bottle, Biff is willing to buy 30 bottles. If the price of Beer is $4 a bottle, Biff is willing to buy 20 bottles. What is Biff's Price Elasticity of Demand? Is his demand elastic or inelastic?
a. Explain what “cross-elasticity of demand” is. b. What is a “substitute good”? Give an example. Does it have a positive or negative cross-elasticity of demand?
The demand for necessities ___a. is more elastic than the demand for luxuries.b. is less elastic than the demand for luxuries.c. All of the above.d. have the same elasticity demand with luxuries.
1. What is price of elasticity? Explain many types of price elasticity and give complete your answer with value for each type elasticity
The demand for rice: a. have the same elasticity with the soft drink b. is more elastic than the demand for car c. all of the above d. have finite utility
11 BIUA + Arlal I| II1 I I 2 The following questions are about income elasticity of demand. 9) Mr. Leon's income increased by 10%. (His "mommy" gave him a raise in his allowance because he was a "good little boy.") His consumption of Lego's then increased by 25%. Calculate his income elasticity. Does this imply that Lego's are a regular or an inferior product for Mr. Leon? 10) Mr. Mendivil's income increased by 20%. His consumption of pictures of Mr. Leon then decreased by 100%. Calculate the income elasticity of demand for the product. Does this imply that pictures of Mr. Leon are regular or inferior products? 11) Larry the Wild & Crazy Monkey saw a decrease in his income by 25%. With this, his consumption of berries increased by 50%. Calculate his income elasticity of demand. What can we conclude about berries as a consumer good for Larry the Wild & Crazy Monkey? Explain. ip lili 司

1. The price of a good rises from $6 to $8. Thus, the quantity demanded of that good falls from 150 to 75 units. Using the point-slope formula, calculate the Price Elasticity of Demand. Note: You’ll use this answer to help you with Question 2 & 3 (coming up next). A. -1.50 B. -0.66 C. -2 D. -0.04 E. -25 F. -1 2. Given your response in Question 1, classify the coefficient of the Price Elasticity of Demand. A. Elastic B. Inelastic C. Perfectly Elastic D. Perfectly Inelastic E. Unit Elastic 3. Which of the following statements is the best interpretation of the coefficient of the Price Elasticity of Demand in Question 1? A. There will be a 0.66 percent decrease in the Quantity Demanded. B. A 1 percent increase in the Price of a good corresponds to a 0.66 percent decrease in the Quantity Demanded for that good. C. A 1 percent increase in the Price of a good corresponds to a 1.55 percent increase in the Quantity Demanded for that good. D. Given the Price…