Which of the following is correct? Quiz Income_Elasticity_Demand.pdf. 06.Elasticity of demand – price, income and cross elasticities – estimation – point and arc elasticity - Giffen Good – normal and inferior goods – substitutes and complementary goods ELASTICITY OF DEMAND Elasticity of demand refers to the sensitiveness or responsiveness of demand to changes in price. INCOME ELASTICITY OF DEMAND When the income of a family or a na-tion rises, so does its demand for most goods and services.9 The ratio of the per- 4. 11. BEC4008 Business Economics Seminar 4: Elasticity of Demand & Supply Multiple choice questions: Question 1: Average income increases from £20,000 p.a to £22,000 p.a. 3. Questions Microeconomics (with answers) 2 Elasticities 01 Price elasticity of demand 1 Thùy Trang Price elasticity of demand 2If the price falls from 6 to 4, the quantity demanded rises from 8000 to 12000. What is the income elasticity of demand and is the good a normal good or an inferior good? The price elasticity of demand is defined by: or equivalently by Note: Elasticity is always computed as a ratio of EC101 DD & EE / Manove Elasticity of Demand>Definition p 7 Price Elasticity of Demand The elasticity of demand tells us how sensitive the quantity demanded is to the good’s price at a given point on a demand curve. B. the product is an inferior good. Demand is price inelastic b. A 10 percent increase in income brings about a 15 percent decrease in the demand for a good. If income elasticity is positive, then, if income increases, there will always be an increase in demand. Sale, Match-box, Pin, Post-card etc, have zero income elasticity. Calculate the price elasticity of demand by using midpoints. a. An income elasticity of demand equal to 2 for a particular product means that: A. demand curves for the product slope upward. Pack 2 - Microeconomics. The quiz can be downloaded here (in pdf format) along with a quiz with answers included. This lesson worksheet / quiz provides multiple choice, short answer and fill in the blank questions on income elasticity of demand. Demand curve in this case is a vertical straight line as given below:- Y D Demand 150 100 75 D X 0 10 Demand . QMICR2.DOC Page 1 (of 3) 2a Elasticities 2016-11-24 Questions Microeconomics (with answers) 2a Elasticities 01 Price elasticity of demand 1 If the price rises by 3 %, the quantity demanded falls by 1.5 %. What happens to turnover (Price * Quantity) due to the price change? The good is inferior c. Income elasticity is -2 d. The product has a positive income elasticity … cant differences in income elasticity,7 and a recent econometric analysis questions the alleged difference in productivity.8 This section considers some evidence concerning both matters. Be able to explain your answer. If the price of a good increases by 8% and the quantity demanded decreases by 12%, what is the price elasticity of demand? Quantity demanded per year increase from 5000 to 6000 units. Quiz with answers Income_Elasticity_Demand_Key.pdf Practice Questions and Answers from Lesson I -4: Demand and Supply 1 Practice Questions and Answers from Lesson I -4: Demand and Supply The following questions practice these skills: Describe when demand or supply increases (shifts right) or decreases (shifts left). C. a 10 percent increase in income will yield a 20 percent increase in the quantity sold. EDEXCEL Alevel Business 1.2.5 Income elasticity of demand YED practice questions worksheet #1 Included: Student worksheet Teacher copy with answers. Identify a competitive equilibrium of demand and supply. a) 10%: b) 5%: c)-5%: d) 2.5%: Please select an answer No, this would only be the case if the income elasticity was 2.