Chapter 5: Q.21 (page 130)
What is the formula for the income elasticity of demand?
The percent change in quantity demanded divided by the percent change in income is the formula for estimating the income elasticity of demand.
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Would you usually expect elasticity of demand or supply to be higher in the short run or in the long run? Why?
What is the price elasticity of demand? Can you explain it in your own words?
From the data in Table 5.5 about the demand for smartphones, calculate the price elasticity of demand from point B to point C, point D to point E, and point G to point H. Classify the elasticity at each point as elastic, inelastic, or unit elastic.
In a market where the supply curve is perfectly inelastic, how does an excise tax affect the price paid by consumers and the quantity bought and sold?
Why is the demand curve with constant unitary elasticity concave?
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