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When a price of a bar of chocolate is $1.00, demand is 100,000 bars. When the price rises to $1.50, demand falls to 60,000 bars. Calculate the price elasticity of demand according to the instructions below.

r quick access, place your bookmarks here on the bookmarks bar. Import bookmarks now.. 10.00 points When the price of a bar of chocolate is $1.00, demand is 100,000 bars. When the price ri Instructions: Round your answers to two decimal places. Do not include a minus sign. a. Suppose price increases from $1.00 to $1.50. The price elasticity of demand in terms of percentage change is b. Suppose price decreases from $1.50 to $1.00 The price elasticity of demand in terms of percentage change is c. Suppose price increases from $1.00 to $1.50 The price elasticity of demand using the mid-point method is d. Suppose price decreases from $1.50 to $1.00. The price elasticity of demand using the mid-point formula is References eBook & Resources Learning Objective:04-01 Calculate price elasticity of demand using the mid-point method Numeric Response 24
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Answer #1

a) P1 $1 Q1- 100,000 P2-$1.50 Q2-60,000 % change in quantity-(Q2-Q1UQ1] 100-[(60.000-100.000)/100,000] 100-.40% % change in price [P2-Pi)PI] 100-[(15-1) 11100-50% Elasticity of demand = % change in Q / % change in P =-40/50 =-0.80 b) P1- S1.5 Q1 60,000 P2- $1 Q2-100,000 % change in quantity [(Q2-Q101] 100-[(100.000-60.000) 60,0001100-66.67% % change in price-P2-PI)PI]100-[(1-1.5)/1.5]100-33.33% Elasticity of demand-% change in Q / % change in P-66.67-33.33-.2 c) P1- $1 Q1-100,000 P2 $1.50 Q2- 60,000 02-01 Elasticitry of demandP P2-Pl P1+P2 60,000-100,000 60,000+100,000 Elasticity of demand 1.5-1 1.5+1 Elasricity of deman0123d) PI = $1.5 Q1 60,000 P2 = $1 Q2 = 100.000 02-01 01+02 Elasticity of demand P2-Pl P1+P2 2 100,000-60,000 60,000+100, 000 Elasticity of demand- 1 1.5+1 Elasticity of demand =05LE -0.4

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