KY
Practice Questions
Sec-A 2021-23
Q1. If the price elasticity of demand for college textbooks is -0.1, and the price of textbooks
increases by 20%, how much will the quantity demanded change, and in what direction?
Price elasticity of demand= (% change in quantity demanded)/ (% change in price)
It is given in the question that price elasticity is -0.1 and percentage change in price is 20%
So, -0.1= (% change in quantity demanded)/ 20
Therefore, % change in quantity demanded is -2%
Q2. In your college town, a new university has opened up. In the short run, the price of
apartments is going to be ___high_______ (high/low) since their supply is
____inelastic______ (elastic/inelastic). Real estate developers are building thousands of new
student-friendly apartments close to campus which will be completed in one year. What can
you say about the rent next year? Will it be higher or lower than today? Draw a diagram to
justify your answer.
Practice Questions
Sec-A 2021-23
Q1. If the price elasticity of demand for college textbooks is -0.1, and the price of textbooks
increases by 20%, how much will the quantity demanded change, and in what direction?
Price elasticity of demand= (% change in quantity demanded)/ (% change in price)
It is given in the question that price elasticity is -0.1 and percentage change in price is 20%
So, -0.1= (% change in quantity demanded)/ 20
Therefore, % change in quantity demanded is -2%
Q2. In your college town, a new university has opened up. In the short run, the price of
apartments is going to be ___high_______ (high/low) since their supply is
____inelastic______ (elastic/inelastic). Real estate developers are building thousands of new
student-friendly apartments close to campus which will be completed in one year. What can
you say about the rent next year? Will it be higher or lower than today? Draw a diagram to
justify your answer.
