Question

question 3
1 pts
suppose the value of the price - elasticity of demand is - 3. what does this mean?
a $1 increase in price causes quantity demanded to fall by 3 units.
a 1 percent increase in the price of the good causes quantity demanded to increase by 3 percent.
a 3 percent increase in the price of the good causes quantity demanded to decrease by 1 percent.
a 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent.

question 6
1 pts
suppose the demand curve for hybrid cars shifts to the right. this will cause a relatively small increase in the price of hybrid cars if
both demand and supply are inelastic.
both demand and supply are elastic.
demand is inelastic and supply is perfectly inelastic.
demand is elastic and supply is inelastic.

Explanation:

For Question 3: The price - elasticity of demand formula is $\%\Delta Q_d/\%\Delta P$. A value of - 3 means for a 1 percent increase in price, the quantity demanded decreases by 3 percent.
For Question 6: When both demand and supply are inelastic, a right - shift in the demand curve will cause a relatively small increase in price.

Answer:

Question 3: D. A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent.
Question 6: A. both demand and supply are inelastic.