Consumers' Expectations in Business Economics
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Questions and Answers

When calculating arc elasticity, what do economists do with the minus sign?

  • They invert the minus sign for consistency.
  • They use the minus sign as a multiplier.
  • They ignore the minus sign completely.
  • They drop the minus sign and use the absolute value. (correct)

    • What is the advantage of using the midpoint formula for percentage change in a variable?

  • It is based on the original values only.
  • It always gives the exact percentage change.
  • It is easier to calculate compared to other formulas.
  • It provides consistent elasticity values when price moves in either direction. (correct)

    • What does Ep = Q2 - Q1 (P2 + P1) * (Q2 + Q1) (P2 - P1) represent when calculating arc elasticity?

  • Percentage change in price only
  • Percentage change in quantity only
  • Coefficient of determination
  • Elasticity of demand (correct)

    • In which direction does price move to get consistent elasticity values when using the midpoint formula?

    <p>In either direction</p> Signup and view all the answers

    If P1= 500, Q1= 100, P2= 400, and Q2= 150, what is the elasticity of demand?

    <p>1.8</p> Signup and view all the answers

    What does the slope of a demand curve indicate about demand elasticity?

    <p>Steeper slope means less elastic demand.</p> Signup and view all the answers

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