Author Question: If the price elasticity of demand for a product is equal to 4, a 1 percent increase in price of the ... (Read 25 times)

lunatika · **on:** Jun 30, 2018

If the price elasticity of demand for a product is equal to 4, a 1 percent increase in price of the product will cause the quantity demanded to _____ by _____ percent.
a. increase; 0.25
b. decrease; 0.25
c. increase; 4
d. decrease; 25
e. decrease; 4

Question 2

Suppose both goods L and M have a price of 6 . To maximize your utility from spending a given amount of income on the two goods you should:
a. consume more each as long as they provide more than 6 units of marginal utility each.
b. consume them so that consumption of each good provides the same total utility.
c. consume them so that consumption of the last unit each good provides the same marginal utility.
d. all of the above.

FergA · **Reply #1 on:** Jun 30, 2018

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