The price of cabbage rises from $0.20 per pound to $0.30 per pound. The quantity of cabbage demanded falls from 800 pounds per week to 600 pounds per week. Use the midpoint formula to calculate the price elasticity of demand for cabbage
Is the demand elastic, inelastic, or unit elastic?
percentage change in quantity demanded = [600 – 800]/700 = -200/700 = -28.6
percentage change in price = [$0.30 - $0.20]/$0.15 = $0.10/$0.15 = 66.7
price elasticity of demand = [-28.6]/[66.7] = -0.43
Since the absolute value of the price elasticity of demand is less than one, the demand is inelastic.
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A) the natural rate of output. B) the natural-rate price level. C) the actual rate of unemployment. D) the expected rate of inflation.
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A) price fixing B) monopolization C) bid rigging D) market division
If demand is price elastic, total revenue is
a. directly related to quantity demanded b. inversely related to quantity demanded c. directly related to price d. directly related to price and inversely related to quantity demanded e. not related to either price or to quantity demanded
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a. the short-run Phillips curve shifts right and unemployment is unchanged. b. the short-run Phillips curve shifts right and unemployment rises. c. the short-run Phillips curve shifts left and unemployment is unchanged. d. the short-run Phillips curve would shift left and unemployment falls.