Question

Can someone please check and tell me what I did wrong, please and thank you.

7. Explain what this result means in words. Price elasty of demand for Cereal is Suppose that a store decreases the price of laundry detergent from $4.10 to $3.50. As a result, quantity demanded increases from 210 to 230. 8. Using the mid-point approach, calculate the percentage change in price. I This assignment by Lumen Learning is licensed under a Creative Commons Attribution 4.0 Elasticity Problem Set! Use the following information to answer questions through 7: When the local grocery store puts cereal on sale, reducing its price from $4.40 per item to $3.40 per item, the quantity sold increases from 220 per week to 230 per week. 1. This illustrates the price elasticity of demand 2. What formula is used to determine the percentage change in quantity demanded? 3. What is the percentage change in quantity demanded for the cereals described above? (230-220) 230 +220 =450/2 lo 450/2 - 225 > 10/225 x 100 = 4 4. What formula is used to determine the percentage change in price? 5. Calculate the percentage change in price for the cereal. [(Pa-P)/(R+R/3)] (4.40-340 / 4,40 + 3.40 1/7.8 = 128 x 100 = 12.891 - 12.9 6. Finally, using the whole formula, calculate the value of the price elasticity of demand for cereal. 7.8 answer questions 8 and 9: Use the following information International License

Answer 1

1. Price, Demand

2.Petcentage Change in Quantity Demanded

= (Change in Quantity Demanded / Original Quantity ) * 100

3. (Q2 - Q1)/Q1 * 100

= (230 - 220)/220 * 100

= 4.5%

4.Percentage in Price

= Change in Price / Price * 100

5.( P2 - P1 ) / P1 * 100

=( 3.40 - 4.40)/4.40 * 100

= -1 / 4.40 * 100

= 22.7% (ignoring minus sign)

6. Price Elasticity of Demand

=Percentage change in Quantity Demanded / percentage change in price

= 4.5/22.7 = 0.19 or 0.2

7.Since Elasticity is less than 1 we can say that Price Elasticity of demand for cereals is Inelastic.

Note Percentage Method is different from Mid point method. You have used Midpoint method but in Ques1to Ques7 percentage method is to be used.