# Microeconomics questions (elasticity)

1. Sep 23, 2009

### danny-saf

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

2. Sep 23, 2009

### General_Sax

A. Demand for popsicles had a price elasticity of -1

I'm pretty sure, because price elasticitiy is a representation of the change in price/demand, and is technically expressed in a negative manner. seems to be a one-to-one ratio.

I forget if it's price over qantity or the other way around.

Econ is so easy, if you show up to the classes you shouldn't have any problems doing decently.

3. Sep 25, 2009

### daviddee305

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.

4. Sep 25, 2009

### daviddee305

I took Micro last semester and when we learned elasticity it was never a negative value except for 'income' and 'cross' elasticity. Elasticity of supply & demand is a ratio to measure responsiveness, and it was always positive. So, if you're professor is using another text that teaches negatives for this measure than General Sax may be correct, and not me.

Last edited: Sep 25, 2009