What is the price elasticity of demand? How is the price elasticity of demand calculated?
What will be an ideal response?
The price elasticity of demand is the responsiveness of the quantity demanded of a good to changes in the price of the good. Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. That is:
Ep = [(change in Q)/(Q1 + Q2)/2]/ [(change in P)/(P1 + P2)/2].
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A federal budget deficit is financed by the
A. private sector's investment spending. B. government purchase of Treasury securities. C. government issuance or sale of Treasury securities. D. nation's exports.
An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services
a. True b. False Indicate whether the statement is true or false
Because economists understand what things change GDP, they can predict recessions with a fair amount of accuracy
a. True b. False Indicate whether the statement is true or false
Figure 7-4
Which of the following is true for the demand curve depicted in ?
a.
An increase in price from $2 to $3 will reduce total expenditures on the product.
b.
In the $2 to $3 range, the price elasticity of the demand curve is approximately unitary.
c.
At a price of $2, the price elasticity of the demand curve equals approximately -2.5.
d.
In the $2 to $3 range, the demand curve is inelastic.