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ECO - determine the Price-Elasticity of Demand Coefficient




Question;Column I - determine the Price-Elasticity of Demand Coefficient. Refer to the Price-ElasticityCoefficient and Formula:change in quantity demandedEP = ---------------------------------------sum of quantities demanded / 2change in price?---------------------------sum of prices / 2The data in the first four columns represent price (P) and quantity demanded (Qd) in time 1 (beforechange in price) and time 2 (after change in price) for a specific good. Note that results should beexpressed in absolute terms. For example, -1 should be expressed as?1?, as should a positive 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 changedsubsequent 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, how much is the change in total revenue or totalexpenditure (TR = P X QD), from the first price level to the second.Column V - indicate the direction of the change, that is, increasing or decreasing (show a + signfor increasing and a ? sign for decreasing).Note: for any monetary result please include the applicable currency symbol ($, ?, etc.)


Paper#57146 | Written in 18-Jul-2015

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