Example Elasticity Problems and How to Solve Them Using Elasticity Triangles

The video tutorial covers elasticity problems using elasticity triangles. It explains price elasticity of demand, cross elasticity of demand, and income elasticity of demand with examples. The tutorial emphasizes the importance of forming and using elasticity triangles and extracting data into tables for easier problem-solving. It concludes with tips to avoid mistakes during exams.

What is the primary purpose of using elasticity triangles in solving elasticity problems?

• To simplify complex calculations

• To visualize the relationship between variables

• To memorize formulas

• To avoid using calculators

If the price elasticity of demand for a product is -3 and the price increases by 20%, what happens to the demand?

• Demand decreases by 20%

• Demand remains unchanged

• Demand decreases by 60%

• Demand increases by 60%

In the context of cross elasticity of demand, what does a positive value indicate?

• The goods are substitutes

• The goods are unrelated

• The goods are complements

• The goods are inferior

If the cross elasticity of demand between two goods is 0.7 and the demand for one decreases by 35%, what is the change in the price of the other good?

• Price decreases by 50%

• Price decreases by 35%

• Price increases by 50%

• Price remains unchanged

What does a negative income elasticity of demand indicate about a good?

• The good is a substitute

• The good is inferior

• The good is a necessity

• The good is a luxury

If consumer incomes increase by 25% and the demand for a good decreases by 10%, what can be inferred about the good?

• It is a luxury good

• It is an inferior good

• It is a normal good

• It is a substitute good

How can organizing data into a table help when solving elasticity problems?

• It reduces the need for formulas

• It helps avoid errors in sign and value

• It simplifies the use of calculators

• It makes calculations faster