Homework Answers
When price is 8, Total expenditure is 800.
Quantity demanded = Total expenditure/Price
Quantity demanded = 800/8 = 100
So,
When price is 8, quantity demanded is 100 units.
When price is 10, Total expenditure is 900.
Quantity demanded = Total expenditure/Price
Quantity demanded = 900/10 = 90
So,
When price is 10, quantity demanded is 90 units.
Calculate the percentage change in quantity demanded -
% change in quantity demanded = [(90 - 100)/100] * 100 = -10%
The percentage change in quantity demanded is -10%
Calculate the percentage change in price -
% change in price = [(10 - 8)/8] * 100 = 25%
The percentage change in price is 25%
Calculate the price elasticity of demand (Ep) -
Ep = % change in quantity demanded/% change in price
Ep = -10/25 = -0.4
Thus,
The Ep by percentage method is -0.4.
Add Answer to:
Find out Ep by the percentage method: Price (SR') Total expenditure (SR) 8 800 10 900
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