Examination
180 minutes
Instructions:
1. Read each question carefully.
2. Answer all questions.
3. Use the provided answer sheet to mark your responses.
4. Ensure all answers are final before submitting the exam.
5. Please answer each question below and click Submit when you
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7. This is Exam which will assess your knowledge on the course
Learning Resources.
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Read All Instructions Carefully and Answer All the
Questions Correctly Good Luck: -
Suppose price of ice cream increased from $4 to $5 and
quantity demanded fell from 100 to 80. Then
percentage changes in price and quantity demanded
are, respectively:
a. 20% and 20%
b. 25% and 20%
c. 1% and 20%
d. 4% and 5% - Answer>> b. 25% and 20%
Based on your answer to the previous question,
calculate elasticity of demand.
a. 0.8
b. 1.0
c. 1.25
d. 2 - Answer>> a. 0.8
Let's reverse the direction. Suppose price of ice cream
decreased from $5 to $4 and quantity demanded
increased from $80 to $100. Then elasticity of demand
is:
a. 0.8
b. 1.0
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, c. 1.25
d. 2 - Answer>> c. 1.25
Price elasticity of demand - Answer>> A measure of how
sensitive/responsive consumers are to the changes in
price
Elasticity of demand - Answer>> measures percentage
change in quantity demanded as a result of a
percentage change in price
Formula for price elasticity of demand - Answer>> Price
elasticity of demand = (percentage change in quantity
demanded) / (percentage change in price)
We say that demand is price elastic if its price elasticity
of demand is ______ (in absolute value) than 1 -
Answer>> Larger
Demand is price inelastic if its price elasticity of
demand is _____ (in absolute value) than 1 - Answer>>
Smaller
Demand is unit price elastic if the price elasticity of
demand is _____________. - Answer>> Exactly equal to
(negative) 1
Why do we use the midpoint formula? - Answer>> To
avoid the confusion of whether we are going from A to
B or B to A: we use the average of A and B in the
denominator instead of choosing one term.
The midpoint formula - Answer>>
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