Question

Chapter 4 Homework G Use the demand schedule in × ロ .dhal, unuG-4a» an. ← × Homework Use the demand schedule in the table below to answer the following questions. Instructions: Use the mid-point method in your calculations. Round your calculations to two decimal places. Round your ans decimal places. Include a negative sign where appropriate. a. The price elasticity of demand for a price change from $2 to $3 is The slope of the demand curve for a price change from $2 to $3 is < Prey 60f 20 Next > 888 ,a

Answer 1

Mid point method of elasticity of demand, Ed = $\frac{Q2-Q1}{P2-P1}\times \frac{P2+P1}{Q2+Q1}$

Slope of demand = $\frac{P2-P1}{Q2-Q1}$

a. Ed = $\frac{35-42}{3-2}\times \frac{3+2}{35+42} = \frac{-7}{1}\times \frac{5}{77} = -0.45$

Slope = (3-2)/(35-42) = 1/(-7) = -0.14

b. Ed = $\frac{21-35}{5-3}\times \frac{5+3}{21+35} = \frac{-14}{2}\times \frac{8}{56} = -1$

Slope = (5-3)/(21-35) = 2/(-14) = -0.14

c. $\frac{7-14}{7-6}\times \frac{7+6}{7+14} = \frac{-7}{1}\times \frac{13}{21} = -4.33$

Slope = (7-6)/(7-14) = 1/(-7) = -0.14