Suppose that the price elasticity of demand for mittens is –2.5 . What would happen to the quantity of mittens demanded if the price of mittens rose from $5 to $6? Use the midpoint formula in your calculations
What will be an ideal response?
percentage change in price = [6 – 5]/[5.5] = 1/5.5 = 18.2
[percentage change in quantity demanded]/[18.2] = -2.5
Therefore, the quantity of mittens demanded will fall by 45.5 percent.
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Total market supply can be derived by
A) horizontally summing individual supply curves at each and every price level. B) vertically summing individual supply curves at the current technology level. C) adding up the largest quantity demanded at various prices. D) looking at the changes in the price of raw materials needed to produce the product.
A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is
a. inelastic. b. unit elastic. c. elastic. d. highly responsive to changes in income.