Chapter 5: Q.10 (page 130)
What is the formula for calculating elasticity?
Elasticity is computed by dividing the % variation in quantity over the % variation in price.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
The average annual income rises from \(25,000 to \)38,000, and the quantity of bread consumed in a year by the average person falls from 30 loaves to 22 loaves. What is the income elasticity of bread consumption? Is bread a normal or an inferior good?
When someone’s kidneys fail, the person needs to have medical treatment with a dialysis machine (unless or until they receive a kidney transplant) or they will die. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that the supply of such dialysis machines will primarily determine the price.
The price of a good rises from \(16 to \)24, and the quantity supplied rises from 90 to 110 units. Calculated with the midpoint method, the price elasticity of supply is
a. 1/5.
b. 1/2.
c. 2.
d. 5.
The supply of paintings by Leonardo Da Vinci, who painted the Mona Lisa and The Last Supper and died in 1519, is highly inelastic. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that demand for these paintings will determine the price.
If the elasticity is greater than one, is demand elastic or inelastic? If the elasticity equals zero, is demand perfectly elastic or perfectly inelastic?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
