Microeconomics Price Elasticity of Demand

1.)<Tab/>If the price elasticity of demand for heroin is estimated to be about 0.4 this means that the demand is mostly inelastic because the elasticity demand is less than one. Being mostly inelastic means a percent change in price leads to a less than proportional percent change in quantity demanded. So if there is a 10% increase in price, it will lead to a 4% decrease in quantity demanded. 2.)<Tab/&…

…elasticity of demand for marijuana is estimated to be 1.5; this means that the price elasticity is mostly elastic because the elasticity demand is greater than one. Being mostly elastic means that a percent change in price leads to a more that proportional percent change in quantity demanded or E is greater than one. So if there is a 10% increase in price, it will lead to a 15% decrease in quantity demanded. 5.)<Tab/>