I need help answering number 4 and 5. A meas urethe changethe level ofa producrespect to a changepriceMh as priceelasticity of demand. The price elasticity could either be elas tic, inelastic, or unitary elastic depending upon the variables.1. Price elasticity of demand could be computed by the formula:Percentage change in quantty demandedPercentage change in price-40%10%-4Percentage change in quantity demandedPercentage change in price=-40%10%=-4Hence, the price elasticity of demand is -4.2. There is an inelastic demand when the demand for a good or service tends to remain unchanged even with the change inprice. There is an elastic demand when with a change in another economic factor there happens a substantial change inquantity being demanded.Having few substitutes would be leading to an Inelastic demand.A longer time period would lead to an Elastic demand.Being a luxury would lead to an Elastic demand.Being a large share of the consumer's budget would lead to an Elastic demand.3. When the elas ticity of demand is less than zero then good is inelastic. When the elasticity of demand is more than zero thengood is elastic.Hence, when the price elasticity of demand is 0.5, the demand is elastic. This indicates that with an increase in the level ofprice, there would be an increase in the quantity being demanded. 1. If a 10% increase in price leads to a 40% decrease in quantity demanded, what is the value of price elasticity of demand? Show your work.2. Which of the following will cause the demand for a good or service to be inelastic?· Having few substitutes· A longer time period· Being a luxury· Being a large share of the consumer's budget3. If the price elasticity of demand is equal to 0.5, is demand elastic, inelastic, or unitary elastic?4. Will a perfectly elastic supply curve be vertical, horizontal, or upward-sloping?5. What price elasticity of supply will lead to a smaller increase in quantity when price changes-elastic, inelastic, or unitary elastic?

A measurement of the change in the level of consumption of a product with respect to a change in the…

4. Will a perfectly elastic supply curve be vertical, horizontal, or upward-sloping? 5. What price elasticity of supply will lead to a smaller increase in quantity when price changes-elastic, inelastic, or unitary elastic?

4. Will a perfectly elastic supply curve be vertical, horizontal, or upward-sloping? 5. What price elasticity of supply will lead to a smaller increase in quantity when price changes-elastic, inelastic, or unitary elastic?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

I need help answering number 4 and 5.

A meas ure
the change
the level of
a produc
respect to a change
price
Mh as price
elasticity of demand. The price elasticity could either be elas tic, inelastic, or unitary elastic depending upon the variables.
1. Price elasticity of demand could be computed by the formula:
Percentage change in quantty demanded
Percentage change in price
-40%10%
-4
Percentage change in quantity demandedPercentage change in price=-40%10%=-4
Hence, the price elasticity of demand is -4.
2. There is an inelastic demand when the demand for a good or service tends to remain unchanged even with the change in
price. There is an elastic demand when with a change in another economic factor there happens a substantial change in
quantity being demanded.
Having few substitutes would be leading to an Inelastic demand.
A longer time period would lead to an Elastic demand.
Being a luxury would lead to an Elastic demand.
Being a large share of the consumer's budget would lead to an Elastic demand.
3. When the elas ticity of demand is less than zero then good is inelastic. When the elasticity of demand is more than zero then
good is elastic.
Hence, when the price elasticity of demand is 0.5, the demand is elastic. This indicates that with an increase in the level of
price, there would be an increase in the quantity being demanded.

1. If a 10% increase in price leads to a 40% decrease in quantity demanded, what is the value of price elasticity of demand? Show your work.
2. Which of the following will cause the demand for a good or service to be inelastic?
· Having few substitutes
· A longer time period
· Being a luxury
· Being a large share of the consumer's budget
3. If the price elasticity of demand is equal to 0.5, is demand elastic, inelastic, or unitary elastic?
4. Will a perfectly elastic supply curve be vertical, horizontal, or upward-sloping?
5. What price elasticity of supply will lead to a smaller increase in quantity when price changes-elastic, inelastic, or unitary elastic?

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