ch 6 - C HAPTER 6 1...

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CHAPTER 6 The price elasticity of demand is defined as the: A) change in quantity demanded divided by the change in price. B) percentage change in quantity demanded divided by percentage change in price. C) change in price divided by the change in quantity demanded. D) percentage change in price divided by the percentage change in quantity demanded. Feedback: See definition of price elasticity of demand. A price elasticity of demand of 0.5 means that: A) demand is elastic. B) quantity demanded changes 0.5 units for each 1% change in price. C) quantity demanded changes 0.5% for each 1% change in price. D) quantity demanded changes 5% for each 1% change in price. Feedback: Price elasticity of demand is the percentage change in quantity divided by the percentage change in price. Economist Patrick McCarthy estimated the price elasticity of demand for new cars to be 0.87. If the price of cars rose by 20%, one would expect the quantity of new cars  demanded to: A) fall 22.9%
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This note was uploaded on 09/11/2011 for the course TERM 1 taught by Professor Smith during the Spring '11 term at FIT.

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ch 6 - C HAPTER 6 1...

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