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ECO - Price-Elasticity of Demand Coefficient




Question;Table attached.Column I - determine the Price-Elasticity of Demand Coefficient.Refer to the Price-Elasticity Coefficient and Formula: Ep = (Change in quantity demanded / sum of quantities demanded / 2) / (change in price / sum of prices / 2)The data in the first four columns represent price (P) and quantity demanded (Qd) in time 1 (before a change in price) and time 2 (after a change in price) for a specific good. ** Note that for full credit, the coefficient results must be expressed in absolute terms. For example, -1 should be expressed as |1|Column II - Interpret the results and indicate the type of elasticity which applies (such as Elastic, Inelastic, Perfectly Elastic, Perfectly Inelastic, Unitary) based on how the quantity demanded changed subsequent to a change in price.Column III - Determine if the good in question would be considered a necessity, a luxury or neither.Column IV - Indicate, in monetary terms and including the applicable currency symbol ($,etc.), how much is the change in total revenue (TR = P X QD), or total expenditure from the first price level to the second.Column V - indicate the direction of the change, that is, increasing or decreasing (show upward facing arrow for increasing and show downward facing arrow for decreasing).


Paper#56129 | Written in 18-Jul-2015

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