Chapter 4 MC.docx - 1 Which of the following best describes...

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1. Which of the following best describes the concept of price elasticity of demand? Your Answer: The proportion of change in sales for a given proportional change in price. CONGRATULATIONS! This is one way to accurately describe price elasticity of demand. Read the discussion on page 78 and learn more. 2. Which of the following does NOT describe why average values are used as scale figures in the arc elasticity formula? Your Answer: Both of the above are accurate depictions of the rationale. WELL DONE! Both statements describe the rationale accurately. Read the discussion beginning on page 79 and learn more. 3. Which of the following does NOT describe why the arc elasticity formula may be judged as superior to the point elasticity formula? Your Answer: The arc elasticity isolates the effects of instantaneous changes in the variables. GIVE YOURSELF A PAT ON THE BACK! The arc elasticity isolates the effects of discrete changes in the variables, not instantaneous changes. Read the discussion beginning on page 79 and learn more. 4. Which of the following describes why the point elasticity formula may be judged as superior to the arc elasticity formula? Your Answer: All of the above may describe why the point elasticity may be judged as superior to the arc elasticity. GOOD CALL! All of the above statements are reasons why the point formula may be judged superior. Read the discussion beginning on page 81 and learn more.
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5. If the demand function is estimated to be Q = 22 - 2P, and we wish to evaluate the impact of a change in price from 5 to 6 using the arc elasticity formula, which of the following statements is correct? Your Answer: Over this range of values, the demand function exhibits unitary price elasticity of demand.
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