If bus travel is an inferior good, then its income elasticity of demand will be:
a. strictly greater than one.
b. positive.
c. equal to zero.
d. negative.
d
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A firm increases its price from $8 to $10 and sees demand for the product fall by 25%. What would the price elasticity of demand be for this product?
a. 0.75 b. 1 c. - 1 d. -1.25 e. 1.25
Assuming elasticity of demand is reported as an absolute value, a price elasticity of demand of 0.4 indicates an:
A. elastic demand, meaning the percentage change in quantity demanded will be greater than the percentage change in price. B. inelastic demand, meaning the percentage change in quantity demanded will be greater than the percentage change in price. C. elastic demand, meaning the percentage change in quantity demanded will be less than the percentage change in price. D. inelastic demand, meaning the percentage change in quantity demanded will be less than the percentage change in price.