Question

Ben and Jerry's is a popular brand of ice cream based in South Burlington, VT. They are known for their delicous and cleverly named flavors and their committment to social responsibility. Suppose the marketing department for a firm like Ben and Jerry's estimates monthly demand for a pint of ice cream to be Q = 1000 - 150P.

a)Using the table provided and Excel functions, calculate quantity demanded for each of the prices given.                                                                          

b) Using the prices provided and quantity demanded you calculated in part a, calculate elasticity (in absolute terms) for each point along the demand curve.                                                                                                                                      

                                                Q =1000 - 150     P            

                a)            b)

Price, $ Quantity              Elasticity

6.00                       

5.75                       

5.50                       

5.25                       

5.00                       

4.75                       

4.50                       

4.25                       

4.00                       

3.75                       

3.50                       

3.25                       

3.00                                                       

Answer 1

a)

Price	Quantity
6.0	100.0
5.8	137.5
5.5	175.0
5.3	212.5
5.0	250.0
4.8	287.5
4.5	325.0
4.3	362.5
4.0	400.0
3.8	437.5
3.5	475.0
3.3	512.5
3.0	550.0

b.

Price	Quantity	% Change in Price=(P2-P1)/P1	% Change in Quantity=(Q2-Q1)/Q1	Elasticity=% Change in Quantity/% Change in Price
6.0	100.0
5.8	137.5	4.17%	37.50%	9.00
5.5	175.0	4.35%	27.27%	6.27
5.3	212.5	4.55%	21.43%	4.71
5.0	250.0	4.76%	17.65%	3.71
4.8	287.5	5.00%	15.00%	3.00
4.5	325.0	5.26%	13.04%	2.48
4.3	362.5	5.56%	11.54%	2.08
4.0	400.0	5.88%	10.34%	1.76
3.8	437.5	6.25%	9.38%	1.50
3.5	475.0	6.67%	8.57%	1.29
3.3	512.5	7.14%	7.89%	1.11
3.0	550.0	7.69%	7.32%	0.95