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Unformatted text preview: Econ 1 Winter 2008 Dr. Narag 1 Homework 3: Elasticity (1) If the price of roller- blades increase by one percent and the quantity demanded falls by 4 percent, then the price elasticity of demand for roller- blade has a value of (a) 0.04 (b) 0.25 (c) 0.25% (d) 4 (e) 4% (2) When the price of hot dog is $1.50 each, 500 hot dogs are sold every day. After lowering the price to $1.35 each, 510 hot dogs are sold every day. At the original price, the demand for hot dogs is (a) Elastic (b) Inelastic (c) Unitary Elastic (d) Perfectly Elastic (e) Perfectly Inelastic (3) Use the following information to answer the following questions. Econ 1 Winter 2008 Dr. Narag 2 Which statement is true about the linear demand curve given above? I. Both slope and price elasticity are constant II. Slope is constant but price elasticity varies III. Total Revenue is constant IV. Price elasticity is constant but slope varies V. Insufficient information to calculate total revenue (4) Suppose that the price elasticity of demand for snow shovels is .1.2. What would have to happen to the price of a snow shovel for the quantity demanded to fall from 2,000 to 1,800? Use the midpoint formula in your calculation....
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This homework help was uploaded on 04/16/2008 for the course ECON 1 taught by Professor Nagata during the Winter '08 term at UCLA.
- Winter '08
- Price Elasticity