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Questions and Answers
When calculating arc elasticity, what do economists do with the minus sign?
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?
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?
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?
In which direction does price move to get consistent elasticity values when using the midpoint formula?
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If P1= 500, Q1= 100, P2= 400, and Q2= 150, what is the elasticity of demand?
If P1= 500, Q1= 100, P2= 400, and Q2= 150, what is the elasticity of demand?
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What does the slope of a demand curve indicate about demand elasticity?
What does the slope of a demand curve indicate about demand elasticity?
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