|
Elasticity
Practice Problems for Elasticity
Problem 1.1:
Yesterday, the price of envelopes was $3 a box, and Julie was willing to buy 10
boxes. Today, the price has gone up to $3.75 a box, and Julie is now willing to
buy 8 boxes. Is Julie's demand for envelopes elastic or inelastic? What is
Julie's elasticity of demand?
[Solution]
Problem 1.2:
If Neil's elasticity of demand for hot dogs is constantly 0.9, and he buys 4 hot
dogs when the price is $1.50 per hot dog, how many will he buy when the price is
$1.00 per hot dog?
[Solution]
Problem 1.3:
Which of the following goods are likely to have elastic demand, and which are
likely to have inelastic demand?
Home heating oil
Pepsi
Chocolate
Water
Heart medication
Oriental rugs
[Solution]
Problem 1.4:
If supply is unit elastic and demand is inelastic, a shift in which curve would
affect quantity more? Price more?
[Solution]
Problem 1.5:
Katherine advertises to sell cookies for $4 a dozen. She sells 50 dozen, and
decides that she can charge more. She raises the price to $6 a dozen and sells
40 dozen. What is the elasticity of demand? Assuming that the elasticity of
demand is constant, how many would she sell if the price were $10 a box?
[Solution]
Help |
Feedback |
Make a request |
Report an error |
Send to a friend
|
