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Let S Work Out A Few Examples To Get A Sense

The document discusses elasticity of demand through several examples. It asks the reader to determine how quantity demanded would change given information about percentage changes in price and the elasticity of demand. It also asks whether the reader would prefer demand to be elastic or inelastic in different housing market situations. Finally, it prompts the reader to identify an obvious substitute that would explain the elastic demand for ballpoint pens with blue ink.

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trilocksp Singh
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201 views

Let S Work Out A Few Examples To Get A Sense

The document discusses elasticity of demand through several examples. It asks the reader to determine how quantity demanded would change given information about percentage changes in price and the elasticity of demand. It also asks whether the reader would prefer demand to be elastic or inelastic in different housing market situations. Finally, it prompts the reader to identify an obvious substitute that would explain the elastic demand for ballpoint pens with blue ink.

Uploaded by

trilocksp Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Solved: Let s work out a few examples to get a sense

Let s work out a few examples to get a sense

Let’s work out a few examples to get a sense of what elasticity of demand means in practice.
Remember that in all of these cases, we’re moving along a fixed demand curve—so think of
supply increasing or decreasing while the demand curve is staying in the same place.

a. If the elasticity of demand for college textbooks is 20.1, and the price of textbooks increases
by 20%, how much will the quantity demanded change, and in what direction?

b. In your answer to part a, was your answer in percentages or in total number of textbooks?

c. If the elasticity of demand for spring break packages to Cancun is 25, and if you notice that
this year in Cancun the quantity of packages demanded increased by 10%, then what
happened to the price of Cancun vacation packages?

d. In your college town, real estate developers are building thousands of new student-friendly
apartments close to campus. If you want to pay the lowest rent possible, should you hope that
demand for apartments is elastic or inelastic?

e. In your college town, the local government decrees that thousands of apartments close to
campus are uninhabitable and must be torn down next semester. If you want to pay the lowest
rent possible, should you hope that demand for apartments is elastic or inelastic?

f. If the elasticity of demand for ballpoint pens with blue ink is –20, and the price of ballpoint
pens with blue ink rises by 1%, what happens to the quantity demanded?

g. What’s an obvious substitute for ballpoint pens with blue ink? (This obvious substitute
explains why the demand is so elastic.)

Let s work out a few examples to get a sense

ANSWER
https://solvedquest.com/let-s-work-out-a-few-examples-to-get-a-sense/

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