Soultion CH 5 - Chapter 5 1)(a) 1.2 (b) +10% (c) +15% (d)...

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Chapter 5 1) (a) –1.2 (b) +10% (c) +15% (d) +12% (e) +.67 3.   (a) % change in  = –50.0%; % change in  Q = + 28.6% ; Elast. = –.57. (b) % change in  = +23.7%; % change in  Q = – 15.4%; Elast. = –.65. (c) % change in  = –97.2%; % change in  Q = + 66.7%; Elast. = –.69. (d) % change in  = +28.6%; % change in  Q = – 28.6%; Elast. = –1.0 5.   (a) Disagree. Buyers will spend more. Since demand is inelastic, the percent decline in quantity demanded is  less  (in absolute value) than the percent increase in price. Thus, total expenditure,  times  Q,  will rise. (b) Disagree: They will gain revenues. If demand for trees is elastic (–1.3), the percent increase in quantity of trees demanded will be  greater  than the percent decrease in price. Thus, total revenues collected by vendors will rise.  times  will be larger. (c.) Disagree: If demand has unitary elasticity, then the percent change in quantity and  the percent change in price are exactly equal. Thus, total revenues,  times  Q,  will not change if price rises. The increase due to the higher price will be exactly offset by the decrease in quantity demanded. 7)
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Soultion CH 5 - Chapter 5 1)(a) 1.2 (b) +10% (c) +15% (d)...

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