Which of the following is an example of price elasticity of demand? A. Banana farmers enjoyed higher prices when the demand for bananas increased B. When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent. C. Richer people buy fewer bananas than poorer people D. When the price of bananas increased by 5 percent and incomes slumped, banana sales decreased by 5 percent Which of the following statements describes a perfectly inelastic demand? A. Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price B. I prefer taking the subway to work rather than driving because of high fuel prices C. The government is promoting generic drugs that are much cheaper. D. Alarge number of youngsters buy roses from Colombian rose-growers before Valentine's Day The demand for plums is unit elastic if __ A. a5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded B. the price of plums does not change after a drought C. any increase in the price of plums results in a 1 percent decrease in the quantity of plums demanded D. my demand for plums increases when the price of apples falls

Question

Which of the following is an example of price elasticity of demand? A. Banana farmers enjoyed higher prices when the demand for bananas increased B. When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent. C. Richer people buy fewer bananas than poorer people D. When the price of bananas increased by 5 percent and incomes slumped, banana sales decreased by 5 percent Which of the following statements describes a perfectly inelastic demand? A. Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price B. I prefer taking the subway to work rather than driving because of high fuel prices C. The government is promoting generic drugs that are much cheaper. D. Alarge number of youngsters buy roses from Colombian rose-growers before Valentine's Day The demand for plums is unit elastic if __ A. a5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded B. the price of plums does not change after a drought C. any increase in the price of plums results in a 1 percent decrease in the quantity of plums demanded D. my demand for plums increases when the price of apples falls

Answer 1

1. The correct answer is B. When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent. This is an example of price elasticity of demand, which measures the responsiveness of the quantity demanded of a good to a change in its price.2. The correct answer is A. Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price. This describes a perfectly inelastic demand, where the quantity demanded does not change in response to a change in price.3. The correct answer is A. a 5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded. This is an example of unit elastic demand, where the percentage change in quantity demanded is equal to the percentage change in price.

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