If a rightward shift of the supply curve leads to a 6 percent decrease in the price and a 5 percent increase in the quantity demanded, the price elasticity of demand is _____.

[1 mark]

(-)0.83

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(-)0.30

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(-)0.60

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(-)1.20

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Solution

The correct option is A (-)0.83
Ed = Percentage change in quantity
demanded
Percentage change in price
Ed = 5
(-)6
Ed = (-)0.83

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Similar questions

Q. A 10 percent increase in the quantity of spinach demanded results from a 20 percent decline in its price. The price elasticity of demand for spinach is _____.

[1 mark]

Q. The price elasticity of demand is 5.0 if a 10% increase in the price results in a ________ decrease in the quantity demanded.

[1 mark]

Show with the help of a diagram, the effect on equilibrium price and quantity when:
(i) Demand is perfectly elastic and supply decreases.
(ii) Supply is perfectly inelastic and demand increases.
(iii) The demand curve is perfectly elastic and the supply curve shifts outwards.

Explain through a diagram the effect of a rightward shift of both the demand and supply curve on equilibrium price and quantity.

An increase in demand leads to a decrease in both the equilibrium price and the equilibrium quantity. A decrease in demand leads to a rise in both the equilibrium price and the equilibrium quantity.

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If a rightward shift of the supply curve leads to a 6 percent decrease in the price and a 5 percent increase in the quantity demanded, the price elasticity of demand is _____. [1 mark]

The correct option is A (-)0.83Ed = Percentage change in quantity demanded Percentage change in price Ed = 5 (-)6 Ed = (-)0.83

If a rightward shift of the supply curve leads to a 6 percent decrease in the price and a 5 percent increase in the quantity demanded, the price elasticity of demand is _____.

[1 mark]

The correct option is A (-)0.83
Ed = Percentage change in quantity
demanded
Percentage change in price
Ed = 5
(-)6
Ed = (-)0.83