When a shift in demand or supply occurs, economists can makea quick prediction of the change in price. The denominator ofthe simple price-change formula is the:
A)multiple of the elasticities of supply and demand.
B)sum of the elasticities of supply and demand.(True Answer )Correct
C)difference between the elasticities of supply and demand.
D)percent change in either demand or supply.

Question

Quizplus · Accepted Answer

The simple price-change formula is ΔP/P = ΔQ/Q/[(Elasticity of Demand) + (Elasticity of Supply)]. Therefore, the denominator is the sum of the elasticities of supply and demand.

When a Shift in Demand or Supply Occurs, Economists Can