Question

1. When the price of fresh fish increases 5%, quantity demanded decreases 10%. The price elasticity of demand for fresh fish is a) perfectly inelastic b) elastic c) inelastic d) unit elastic 2. The determinants of elasticity include a) availability of substitutes.b) range of defination. c) time. d) all of the above 3. Cross-price elasticity of demand measures the response in the a) price of a good to a change in the quantity of another good demanded b) income of consumers to the change in the price of goods. c) quantity of one good demanded when the quantity demanded of another good changes. d) quantity of one good demanded to a change in the price of another good. 4. A value of price elasticity of demand equal to 2 means that: a) demand is relatively inelastic. b) quantity demanded falls by two times the amount of an increase in price. c) when price increases, quantity demanded increases by twice as much. d) the percentage quantity demanded falls by

Answer 1

Answer:

1. When the price of fresh fish increases 5%, quantity demanded decreases 10%. The price elasticity of demand for fresh fish is elastic.

2. The determinants of elasticity include d) all of the above.

3. Cross-price elasticity of demand measures the response in the d) quantity of one good demanded to a change in the price of another good.

4. A value of price elasticity of demand equal to 2 means that b) quantity demanded falls by two times the amount of an increase in price.

Explanation:

Price elasticity of demand = % change in quantity demanded of a good / % change in price of the good. Value greater than 1 implies quantity demanded is price elastic, equal to 1 implies quantity demanded is price unitary elastic and smaller than 1 implies quantity demanded is price inelastic.

Cross Price Elasticity of demand = % change in quantity demanded of a good / % change in price of another good.

For rest, refer to the answer.