Problem 13
Meaning of Price Elasticity of Demand: A change in the quantity demanded of a product or service in relation to a change in price of that product or service.
Goods | Price Elasticity | Demand | Interpretation | |
Asparagus | -0.58 | Inelastic Demand | Consumers are used to using Asparagus or may be it is a small percentage of their expenditure, hence it's price elasticity is inelastic. |
The consumers are relatively unresponsive to change in price.The percentage change in Qty demanded is less than the percentage change in price. With every 1% increase in the price of Asparagus, the Qty Demanded will fall by 0.58% |
Cantaloupe | -1.50 | Elastic Demand |
Luxury Good (Cheaper Substitute fruits are available) |
The consumers are relatively responsive to price changes.The percentage change in Qty demanded is greater than percentage change in price. With every 1% increase in the price of Cantaloupe, the Qty demanded will fall by 1.50%. If price of Cantaloupe rises, the consumers will shift to cheaper substitute. |
Milk | -0.17 | Inelastic Demand |
Necessary Good (People are used to it) |
The consumers are relatively unresponsive to change in price.The percentage change in Qty demanded is less than the percentage change in price. With every 1% increase in the price of Milk, the Qty Demanded will fall by 0.17%. Since Milk is a Necessary Good and people are used to it, it's price elasticity is inelastic i.e even if price of Milk rises it's demand will not decrease significantly and consumers will continue buying it. |
Bottled Water | -1.39 | Elastic Demand |
Luxury goods (Cheaper substitute is available i.e. Tap Water) |
The consumers are relatively responsive to price changes.The percentage change in Qty demanded is greater than percentage change in price. With every 1% increase in the price of Bottled Water, the Qty demanded will fall by 1.39%. If price of bottled water increases, consumers will shift to tap water which is a cheaper substitute easily available. |
Just problem 13 10. Given the following demand schedule, calculate the price elasticity of demand for...
Part C: Price Elasticity of Demand 10. Given the following demand schedule, calculate the price elasticity of demand for a price change from $40 to $35. Use the midpoint formula and show all work for full credit. (2 points) Price (S) 45 40 35 30 25 20 15 10 Quantity Demanded 15 30 45 60 75 90 105 120 135 11. Using the schedule above, calculate the elasticity of demand when price changes from $25 to $20. Again, show all...
20 Use the supply and demand schedule below to answer the following questions: Price S25 30 35 40 45 Quantity Demanded Quantity Supplied 80 65 50 35 20 20 35 50 65 80 b. If there is a shortage of 30 units, what is the market price? c. At a price of $40, the market experiences a of units
From the demand schedule in the table below for smart phones calculate the price elasticity of demand between the following points. Use the midpoint formula for price elasticity of demand. Hint: the PED is always reported as a positive number. 1.Point B to point C 2. Point D to point E 3. Point G to point H Point Price A60 B 70 80 90 100 Quantity Demanded 3,000 2,800 2,600 2.400 2,200 2,000 1,800 1,600 120 130 The price of...
The price elasticity of demand will always be a negative number because: demand is determined by consumers. producers and consumers like different prices. price and quantity demanded move in opposite directions. price and quantity demanded move in the same direction The income elasticity of demand for a good describes how much: the quantity supplied changes in response to a change in producers' incomes the quantity supplied changes in response to a change in consumers' incomes. the quantity demanded changes in...
1. Calculate the Price Elasticity of Demand for FIRM 1, ηd, between the following two points: (use the midpoint formula) Price of Good Quantity of Good 24 1,900 41 1,520
QUESTION 1 Use the following demand schedule. Quantity Price So S2 $4 S6 s8 45 35 25 15 work. Interpret this number. Is the elasticity of demand elastic, inelastic, or unit elastic between S6 and SS Given your Explain. Using the midpoint method, what is the price elasticity of demand between S6 and $87 Show your answers would a price increase from S6 to $8 increase or decrease total revenue for the firm? TTTArial Chick Save and Submit to save...
4. Suppose you are given the following demand schedule for 4 individuals. Use this information to complete the rest of the question. Price Ringo Paul John George Market 0 0 0 248 9 6 8 16 10 10 12 32 11 | 14 | 16 40 50 12 18 20 48 a) (5 points) Fill in the blanks above to determine the market demand schedule. b) (4 points) How does Ringo's own-price elasticity of demand compare with the market's own-price...
Quantity Demanded (Income=$10,000) Quantity Demanded (Income-$12,000) a. Use the midpoint method to calculate your price elasticity of demand as the price of compact discs increases from $8 to $10 if your income is $12,000 b. Calculate your income elasticity of demand as your income increases from $10,000 to $12,000 if the price is $16 3 (30 points). 9. Consider the following policies, each of which is aimed at reducing violent crime by reducing the use of guns. Illustrate each of...
Willy's widgets, a monopoly, faces the following demand schedule (sales of widgets per month): Price $20 30 40 50 60 70 80 90 100 Quantity 40 35 30 25 20 15 10 5 0 Calculate marginal revenue over each interval in the schedule (for example, between Q = 40 and Q=35). Recall that the revenue is the added revenue from an additional unit of production/sales and assume MR is constant within each interval. If marginal cost is constant at $20...
Q1 Which of the following are included and which are excluded in calculating this year's GDP. Explain in each instance. a. A monthly scholarship cheque received by an economics student b. The purchase of an almost new tractor by farmer Kojo C. The cashing in of a savings bond d. An increase in business inventories e. Tim Horton's purchases a corner grocery store f. Fearless Qweenie Kong, a stuntwoman, purchases a life insurance policy for a billion dollars ($) g....