Homework Answers
The formula for price elasticity of demand is = Percentage change in quantity demanded / Percentage change in price.
Between prices 10 and 12,
The price elasticity of demand on D1:
Percentage change in quantity demanded = (14 - 12)/12 * 100 = 16.67%
Percentage change in price = (12 - 10)/10 * 100 = 20%
So price elasticity of demand = 16.67% / 20% = 0.83
The price elasticity of demand on D2:
Percentage change in quantity demanded = (14 - 8)/8 * 100 = 75%
Percentage change in price = (12 - 10)/10 * 100 = 20%
So, price elasticity of demand = 75% / 20% = 3.75
Answer:
Between the two prices 10 and 12, the price elasticity of demand is 0.83 on demand curve D1 and 3.75 on demand curve D2.
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