我唔係好識分elastic同inelastic. 自修做左小小練習題. 高手可唔可以幫我check下?
a) if price falls, quanity demanded rises
b) if price fall by 20%, quantity demanded rises by 10 units
c) if price falls by 20 cents, quantity demand rise by 10 units
d) if price falls by 20%, total expenditures on the good remain unchanged
e) if price fall by 10%, quantity demanded rises by 20%
a)not enough information, demand can be either elastic or inelastic
what is absolute changes?
- Gabriella MontezLv 71 decade agoFavorite Answer
Consider: Ed = % Change in Qd / % Change in price
For a, if price falls, Qd rises
It only states out the law of demand: an increase ( decrease ) in price of a good will result in a decrease ( increase ) in its Qd, ceteris paribus. From that, you cannot deduce the price elasticity of demand. So you are correct.
For b and c, there are some problems.
Ed refers to % change in Qd as well as % change in price, but not the absolute changes. Therefore the answers should be not enough information as well.
Consider the case in b, suppose the original Qd is 90 and the new Qd is 100, % change in Qd:
[( 100 - 90 ) / 90 ] x 100% = 11.1%
Then Ed = 11.1% / 20% = 5 / 9 < 1
In this case, demand will be inelastic.
But then, if the orignal Qd is 10 and the new one is 20, the % change will be:
[( 20 - 10 ) / 10 ] x 100% = 100%
Then Ed = 100% / 20% = 5 > 1
In this case, demand will be elastic.
From the above, you can see that without the figures of % change, you can never tell what Ed is. Similar approach can be applied to c) and you will also notice that Ed cannot be determined.
For d, it is correct because total expenditure = Qd x price, when Ed = 1, % change in Qd = % change in price and hence the total expenditure remains the same under the price change.
For e, apply the equation,
Ed = 20% / 10% = 2 > 1
Therefore it is of elastic demand.
2007-10-03 13:38:47 補充：
In the above, the absolute changes refer to b) Qd rises by 10 units ; c) price falls by 20 cents and Qd rises by 10 units.Source(s): My Econ Knowledge