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Help with Elasticity Problems

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Question;Demanded Price Elasticity;100 $ 5;80 $10;60 $15;40 $20;20 $25;10 $30;1. a. Determine the price elasticity of demand at each;quantity demanded using the arc or midpoint;formula: Percentage change in quantity;demanded?(Q2Q1)/Q1divided by percentage;change in price?(P2P1)/P1.;b. Redo exercise 1a using price changes of $10;rather than $5.;2. Plot the price and quantity data given in the;demand schedule of exercise 1. Put price on the vertical;axis and quantity on the horizontal axis. Indicate;the price elasticity value at each quantity;demanded. Explain why the elasticity value gets;smaller as you move down the demand curve.;3. What would a 10 percent increase in the price of;movie tickets mean for the quantity demanded of a;movie theater if the price elasticity of demand was;0.1, 0.5, 1.0, and 5.0?;4. Using the demand curve plotted in exercise 1, illustrate;what would occur if the income elasticity of;demand was 0.05 and income rose by 10 percent. If;the income elasticity of demand was 3.0 and income;rose by 10 percent, what would occur?

 

Paper#57043 | Written in 18-Jul-2015

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