ECN206 Macroeconomics (14-Feb-2024 - 09-Apr-2024 [001]) Week 3 - Section 6 Knowledge Check Week 3 - Section 6 Knowledge Check 3 OF 5 QUESTIONS REMAINING Test Content Question 1 2 Points A 10% increase in the price of pizza causes a 10% drop in the quantity of both pizza and beer sold. Describe elasticities and the nature of the two products. Price elasticity of demand = % change in quantity / % change in price = 10% / 10% = -1 The negative sign shows that Pizza conforms to the Law of Demand. Elasticity = 1 implies that it is Unitary Elastic. Question 2 2 Points Define wage elasticity of labor supply and differentiate the elasticity between teenage workers and that of middle-aged adult workers in the workforce. The income elasticity of demand is the percentage change in quantity demanded divided by the percentage change in income. Income elasticity of demand = % change in quantity demanded/ % change in income The wage elasticity of labor supply for teenage workers is generally thought to be fairly elastic: that is a certain percentage change in wages will lead to a larger percentage change in the quantity of hours worked. Conversely