Topic Questions (EASY): Price elasticity, income elasticity and cross elasticity of demand

How is the price elasticity of demand calculated?

change in price / change in quantity demanded

change in quantity demanded / change in price

percentage change in price / percentage change in quantity demanded

percentage change in quantity demanded / percentage change in price

At $25 per unit, a good has a unitary price elasticity of demand and 100,000 units are sold. If the firm wants to sell 125,000 units, what price must it charge?

$24

$20

$16

$12

What is meant by cross elasticity of demand?

the responsiveness of price of good X due to a change in demand of good Y

the responsiveness of quantity demanded of a good due to a change in its price

the responsiveness of quantity demanded of good X due to a change in quantity of good Y

the responsiveness of quantity demanded of good X due to a change in the price of good Y

Based on an estimated income elasticity of -0.04, what can be concluded about bread?

It is a luxury good.

It is an inferior good.

It is a normal good.

It is a complementary good.

Suppose the price of petrol increases by 100%, but the prices of the two models of cars remain unchanged. Based on the information provided, what is the expected effect on the number of cars sold per week?

An increase of 5,000 cars sold per week.

No change in the number of cars sold per week.

A decrease of 5,000 cars sold per week.

A decrease of 15,000 cars sold per week.