ECS 1500 ASSIGNMENT 2

Assignment 02 (second semester) ASSIGNMENT 02 (SECOND SEMESTER) UNIQUE NUMBER CLOSING DATE LEARNING UNITS WEIGHT FOR SEMESTER MARK NUMBER OF QUESTIONS 18 September 2020 5 to 7 30% of semester mark 20 2.1 When calculating price elasticity of demand the answer will always be negative, because the demand curve has a downward slope. [1] True [2] False Explanation: Price elasticities of demand are always negative since price and quantity demanded always move in opposite directions (on the demand curve). By convention, we always talk about elasticities as positive numbers. Mathematically, we take the absolute value of the result 2.2 When demand is elastic, it means that the quantity demanded will not be sensitive to a change in the price level. [1] True [2] False Explanation: The price elasticity of demand measures the sensitivity of the quantity demanded to changes in the price. Demand is inelastic if it does not respond much to price changes, and elastic if demand changes a lot when the price changes. 2.3 The change in GDP is the best measure of the change in economic activity in a country. 2 [1] True [2] False Explanation: GDP is an