# Microeconomics questions (elasticity)

by danny-saf
Tags: elasticity, microeconomics
 P: 2 When the price of popsicles rose from $10 to$11, consumer expenditures on them dropped by 10%, indicating that: A. Demand for popsicles had a price elasticity of -1 B. Demand for popsicles was price-elastic C. Popsicles are a normal good D. Popsicles are an inferior good E. More than one answer is correct 2. At a price of $10, Jane would buy 8 CDs. At a price of$12, Jane would buy 6 CDs. Her price elasticity of demand would then be: A. -1/2 B. -11/7 C. -5/4 D. -5/8 E. -4/5
 P: 16 Price Elasticity is expressed as: (Change in % of Quantity Demanded / Change in % of Price) To determine the change in % of QD, you use [$1/($21/2) = ~ 9.5%]. So a change in the price of 9.5% led to a change in consumer demand of 10% (10/9.5 = 1.05) 1.05 tells you whether or not demand is elastic or inelastic, and based on that formula you should be able to infer the answer to second question.