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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
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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.
Transcribed Image Text: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?
Transcribed Image Text: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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