Question

.Suppose that the initial price of eggs (before the pandemic) was $2.00 per carton of dozen eggs. Susan used to buy eggs each week for a monthly total of 4 cartons. After the shut-down due to the pandemic, Susan is now shopping for eggs every other week. The price of eggs has increased from $2.00 per carton to $3.00 per carton. Susan now buys a monthly total of 6 cartons. Calculate Susan's elasticity of demand for eggs. Step 1: Find the absolute change in quantity.

(1 Point)

Answer 1

Initial New Quantity at (Q1) price [PD = price (P2). = Initial Price = - $2.00 pee carton $3.00 pee carton 4 cartons lin a month) Quanlity at New Price = - 6 cartons a month) in Now Price Elasticity = Apå of demand (Ed) P = 2, P2 = 3 Q = 4, Q2 = 6 DQ = Q2QL = 6-4 DQ = 2 Cartous - (en a mouth) AP = P2P 3-2 _ =$1 i Ed = 2 x Ž Ed = i Elasticity of » demand is 1 Even though the price has increasd quantity demanded also increaus (as the elasticity is positiwi). Genually, a positivi elasticity indicates that the good is an enferior good. But here it can be a pandemic espect to stock up the goods even when the price bun charged has increand. ben