The price elasticity of demand (absolute value) for mangoes is 2. Which of the following is true?Group of answer choicesThe quantity demanded is not very responsive to the changes in priceThe price is responsive to changes in quantity demandedThe quantity demanded is responsive to changes in priceNone of the above
Question
The price elasticity of demand (absolute value) for mangoes is 2. Which of the following is true?Group of answer choicesThe quantity demanded is not very responsive to the changes in priceThe price is responsive to changes in quantity demandedThe quantity demanded is responsive to changes in priceNone of the above
Solution
The quantity demanded is responsive to changes in price.
Here's why:
The price elasticity of demand measures how responsive quantity demanded is to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
In this case, the price elasticity of demand for mangoes is 2. This means that a 1% change in price will result in a 2% change in quantity demanded.
Because the absolute value of the price elasticity is greater than 1, we say that the demand for mangoes is elastic. This means that the quantity demanded is very responsive to changes in price.
Therefore, the statement "The quantity demanded is responsive to changes in price" is true.
Similar Questions
The price elasticity of demand (absolute value) for apples is 1. Which of the following is true?Group of answer choicesAll of the aboveThe price is responsive to changes in quantity demandedNone of the aboveA change in price results in an equally proportional change in quantity demanded
Demand is said to be elastic when the: Group of answer choicespercentage change in quantity demanded is less than the percentage change in price.percentage change in quantity demanded is greater than the percentage change in price.change in quantity demanded is less than the change in price.change in quantity demanded is greater than the change in price.
Price elasticity of demand reveals how responsive the change in quantity demanded is to a change in price
a. If price elasticity of demand is -1.6 and price increases by 2 percent, quantity demanded will by . b. If price elasticity of demand is -0.8 and price decreases by 2 percent, quantity demanded will by .
If the quantity demanded of a good is sensitive to a change in the price of that good, demand is said to be elastic.Question 5AnswerTrueFalse
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