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Author Question: The price of pizza falls by 25 percent. If the elasticity of demand for pizza is equal to 1.5, what ... (Read 128 times)

ashley

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on: Jun 29, 2018
The price of pizza falls by 25 percent. If the elasticity of demand for pizza is equal to 1.5, what will happen to the quantity of pizza demanded?
 
  What will be an ideal response?

Question 2

Most economists will argue that the minimum wage causes unemployment. Even politicians will recognize this when pressed.
 
  However, typically liberals will tout the benefits of the minimum wage while conservatives will decry the disruption that it causes in the labor market. Which economic objective seems to be more important for liberals and which is more important to conservatives if this general observation is correct? Which side is right?


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ttt030911

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Reply #1 on: Jun 29, 2018
Answer to Question 1

percentage change in quantity demanded/-25 = -1.5 . If the price of pizza falls by 25 percent, the quantity of pizza demanded will rise by 37.5 percent.

Answer to Question 2

If this general observation is correct then it would seem that liberals are more concerned with equity and conservatives are more concerned with efficiency. Neither side is right. That is a normative question. The reason is that there is a tradeoff between equity and efficiency. Which one you want more of is a question of your values.


ashley

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

sarah_brady415

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Reply 3 on: Yesterday
Excellent

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