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Chapter 19: Q.21 (page 435)

Consider Figure 19-3. Following a price increase, is the quantity demanded more responsive to the price increase immediately, after an initial passage of time, and then after even more time has passed? Why is this so?

Short Answer

Expert verified

Time turns into a significant variable in deciding the elasticity of demand. So the demand turns out to be more versatile with the progression of time.

Step by step solution

01

Given Information

Price elasticity of demand estimates how much the demand for the product changes with one unit change in the cost of the ware.

02

Explanation

The demand for the item turns out to be more responsive with the progression of time the demand turns out to be more versatile with the progression of time.

Customers find opportunities to conform to changes in cost. They can't promptly improve on their current propensity right away. They set aside some margin to improve on their current propensity. So at first, the demand is inelastic and afterwards steadily with time it becomes inelastic.

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Most popular questions from this chapter

Would the estimated price elasticity of demand for movie tickets have been different if we had not used the average-values formula?? How?

Assume that the income elasticity of demand for hot dogs is -1.25 and that the income elasticity of demand for lobster is 1.25. Based on the fact that the measure for hot dogs is negative while that for lobster is positive, are these normal or inferior goods?

The diagram below depicts the demand curve for "miniburgers" in a nationwide fast-food market. Use the information in this diagram to answer the questions that follow.

Quantity (mini burgers per day)

a. What is the price elasticity of demand along with the range of the demand curve between a price of \(0.20per miniburger and a price of role="math" localid="1651796932841" \)0.40per miniburger? Is demand elastic or inelastic over this range?

b. What is the price elasticity of demand along with the range of the demand curve between a price of \(0.80 per miniburger and a price of \)1.20 per miniburger? Is demand elastic or inelastic over this range?

c. What is the price elasticity of demand along with the range of the demand curve between a price of \(1.60 per miniburger and a price of \)1.80 per m ? Is demand elastic or inelastic over this range?

An individual's income rises from \(80,000per year to \)84,000per year, and as a consequence the person's purchases of movie downloads rise from 48per year to 72per year. What is this individual's income elasticity of demand? Are movie downloads a normal or inferior good? (Hint: You may want to refer to the discussion of normal and inferior goods in Chapter 3.)

At a price of \(57.50to play 18holes on local golf courses, 1,200consumers pay to play a game of golf each day. A rise in the price to \)62.50causes the number of consumers to decline to 800. What is the price elasticity of demand? Is demand elastic, unit-elastic, or inelastic?
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