With an initial quantity demanded of 10 and initial price of $20, and quantity demanded changing...

Question

Question

business economics

Answer 1

Answer #1

Here, P1 = $20 Q1 = 10

P2 = $18 Q2 = 15

Elasticity = (Q2 - Q1) / (P2 - P1) * (P1 + P2) / (Q1 + Q2)

= (15 - 10) / (18 - 20) * (20 + 18) / (10 + 15)

= (5 / -2) * (38 / 25)

= (190 / -50)

= -3.8

The absolute value of elasticity is 3.8

This elasticity is called Price Elasticity of Demand

Since the absolute value of PED is greater than 1, this elasticity is elastic.

Answer 2

Similar Homework Help Questions

The price of widgets is $20 and the quantity demanded at $20 is 100. The price...

The price of widgets is $20 and the quantity demanded at $20 is 100. The price of widgets decreases to $10 and the quantity demanded increases to 120. Calculate the price elasticity of demand, being sure to show enough work that it is clear to follow your process. Is this elastic or inelastic? What should be done, if anything, to price to increase revenues?
Quantity Demanded Price Substitute/ Complement Elasticity Price elastic/Unit elastic, Inelastic 10 100 80 20

Quantity Demanded Price Substitute/ Complement Elasticity Price elastic/Unit elastic, Inelastic 10 100 80 20
Quantity Demanded Price $25 $15 Complete the following table by calculating the price elasticity of demand...

Quantity Demanded Price $25 $15 Complete the following table by calculating the price elasticity of demand between specified points and indicating whether inelastic, or unit elastic. (Hint: Use the midpoints formula.) Interval From P - $20 to P - $25 From P - $20 to P - $15 Price Elasticity of Demand -1.40 Elastic, Inelastic, or Unit Elastic Elastic Elastic Inelastic From P - $15 to P - $20 From P - $15 to P - $10 Inelastic

.If a 10 percent price increase generates a 20 percent decrease in quantity demanded, then demand...

.If a 10 percent price increase generates a 20 percent decrease in quantity demanded, then demand is A. unit elastic. B. inelastic. C. elastic. D. perfectly inelastic . E. perfectly elastic.
If the quantity demanded of juice decreased by 15% when the price of juice increased by...

If the quantity demanded of juice decreased by 15% when the price of juice increased by 10%, the price elasticity of demand for juice is , and the demand for juice is said to be 2/3: elastic c. 3/2; elastic b. 2/3: inelastic d. 3/2; inelastic If the absolute value of the price elasticity of demand for milk is equal to 0.6, the demand for milk is: a relatively elastic. C. relatively inelastic, b. unit elastic. d. perfectly inelastic, demand...
12. If the price decreases from $10 to $8 and the quantity demanded increases from 50...

12. If the price decreases from $10 to $8 and the quantity demanded increases from 50 units to 55 units the price-elasticity of demand at $10 is _______________________. Thus the price elasticity of demand is _______________________ and therefore total revenue can be increased by ________________________ the price. 13. The elasticity of demand gives the _______________ change in quantity demanded give the __________________ change in price. 14. If Demand is relatively elastic and Supply is also relatively elastic and the government...

Question 1 Presented below is the table related to box of envelopes price and quantity demanded:...

Question 1 Presented below is the table related to box of envelopes price and quantity demanded: Box Of Envelopes Price Quantity Demanded 3$ 500 3.50 $ 450 5$ 300 6 $ 250 a) Calculate the Mid-Point of Quantity and the Mid-Point of Price when price increases from 5$ to 6$. (40 points) (10 points for calculation, 10 points for correct answer) b) Calculate the Price Elasticity of Demand using the Mid-Point Method. (20 points) (10 points for calculation, 10 points...
If the price of a good increases by 8% and the quantity demanded decreases by 12%,...

If the price of a good increases by 8% and the quantity demanded decreases by 12%, what is the own price elasticity of demand? Is it elastic, inelastic or unitary elastic?
If a 10% increase in the price of beer reduces the quantity demanded by 8%, then...

If a 10% increase in the price of beer reduces the quantity demanded by 8%, then demand for beer is Inelastic** elastic unit elastic had increased had decreased The answer is A, but I thought that whenever quantitity demanded changes as a result of price change that makes it Elastic? Please explain!

Suppose that when the price for Good A increases by 7 percent, the quantity demanded for...

Suppose that when the price for Good A increases by 7 percent, the quantity demanded for that product decreases by 6 percent. Accordingly, calculate the own price elasticity of demand for Good A. Is demand for Good A elastic, inelastic, or unit elastic?