1. If a 3 percent increase in price leads to a 5 percent increase in quantity supplied, then
a. Supply is unit elastic
b. Demand is inelastic.
c. Demand is elastic.
d. Supply is elastic.
e. Supply is inelastic.
2. Moving along a demand curve, the quantity demanded decreases 8 percent when price increases 10 percent.
The price elasticity of demand is calculated to be ________.
Given the price elasticity of demand calculated in part a, demand is ________ (elastic, inelastic or unitary elastic) along this portion of the demand curve.
3. Fill in the blanks:
When demand is elastic, the _______ effect dominates the _______ effect.
When demand is inelastic, the _______ effect dominates the _______ effect.
4. Use the following coordinates to answer the following questions.
(2400, $0), (1800, $3), (1000, $7), and (0, $12)
a. Find the arc price elasticity of demand over the price range from $3 to $7. Interpret the value of price elasticity.