Respuesta :
Answer: Elasticity of demand mesures the responsivness of quantit demanded to a change in the price of the product. It is calculated as,
[tex] e=\frac{Change in Q}{Original Quantity} * \frac{Original Price}{Change in Price} [/tex]
a. P1 = $160 , P2= $140, Q1=80, Q2= 120
e=[tex] e=\frac{120-80}{80} * \frac{$160}{140 - 160}
= \frac{40}{80} * \frac{$160}{-$20}
=\frac{1}{2} * -8
= -4 [/tex]
b. P1 = $140 , P2= $160, Q1=120, Q2= 80
e=[tex] e=\frac{80-120}{120} * \frac{$140}{160 - 140}
= \frac{-40}{120} * \frac{$140}{$20}
=\frac{-1}{3} * 7
= -2.33 [/tex]
c. Mid-point method is given by
[tex] e=\frac{Q2-Q1}{Q1+Q2/2} * \frac{P1+P2/2}{P2-P1} [/tex]
So, we have
[tex] e= \frac{120 - 80}{120+80/2} * \frac{140+160/2}{140-160}
=\frac{40}{100} * \frac{150}{-20}
= - 3 [/tex]
d. P1=$40, P2= $20, Q1= 320, Q2= 360
[tex] e = \frac{360-320}{320} * \frac{40}{20 - 40}
= \frac{40}{320} * \frac{40}{-20}
= -0.25 [/tex]
e. P1=$20, P2= $40, Q1= 360, Q2= 320
[tex] e = \frac{320-360}{360} * \frac{20}{40 - 20}
= \frac{-40}{360} * \frac{20}{20}
= -0.11 [/tex]
f. [tex] e= \frac{360 - 320}{360+320/2} * \frac{40+20/2}{20-40}
=\frac{40}{340} * \frac{30}{-20}
= - 0.17
Answer:
A. -4
b. -2.33
c. -3
d. -0.125
e. -0.11
f. -0.176
Explanation:
Price elasticity of demand defies the degree of responsiveness of the quantity demanded for a good or service to changes in price when other factors remained unchanged. The price elasticity of demand is calculated as the ratio of the percentage change in the quantity demanded of a good or service to the percentage change in the price.
An elastic demand: elasticity ≥ 1 , indicating a high degree of responsiveness to changes in price.
Inelastic demand : Elasticities ≤ 1, correspond to a low degree of responsiveness to price changes.
Unitary elasticities equals one, indicating a proportional responsiveness of demand to changes in price.
[tex]Elasticity = \frac{percentage\ change\ in\ quantity}{percentage\ change\ in\ price}[/tex]
A.
[tex]A. Elasticity = \frac{percentage\ change\ in\ quantity}{percentage\ change\ in\ price}\\\\Elasticity = \frac{80-120}{80} * \frac{160}{160-140}\\\\Elasticity = \frac{-40}{80} * \frac{160}{20} = -4[/tex]
b.
[tex]Elasticity = \frac{percentage\ change\ in\ quantity}{percentage\ change\ in\ price}\\\\Elasticity = \frac{80-120}{120} * \frac{140}{160-140}\\\\Elasticity = \frac{-40}{120} * \frac{140}{20} = -\frac{7}{3} = -2.33[/tex]
c. using the midpoint formula
[tex]Percentage\ change\ in \ quantity = \frac {Q2-Q1}{(Q2+Q1)/2 } \\\\[/tex]
[tex]Percentage\ change\ in \ Price = \frac {Q2-Q1}{(Q2+Q1)/2 }[/tex]
[tex]Elasticity = \frac{percentage\ change\ in\ quantity}{percentage\ change\ in\ price}\\\\Elasticity = \frac{80-120}{(120 + 80)/2} * \frac{(140+160)/2}{160-140}\\\\Elasticity = \frac{-40}{100} * \frac{150}{20} = -3[/tex]
d.
[tex]Elasticity = \frac{percentage\ change\ in\ quantity}{percentage\ change\ in\ price}\\\\Elasticity = \frac{360-320}{320} * \frac{40}{20-40}\\\\Elasticity = \frac{40}{320} * \frac{20}{-20} = -\frac{1}{8} = -0.125[/tex]
e.
[tex]Elasticity = \frac{percentage\ change\ in\ quantity}{percentage\ change\ in\ price}\\\\Elasticity = \frac{320-360}{360} * \frac{20}{40-20}\\\\Elasticity = \frac{-40}{360} * \frac{20}{20} = -\frac{1}{9} = -0.11[/tex]
f.
[tex]Elasticity = \frac{percentage\ change\ in\ quantity}{percentage\ change\ in\ price}\\\\Elasticity = \frac{360-320}{(360 + 320)/2} * \frac{(40+20)/2}{40-20}\\\\Elasticity = \frac{40}{340} * \frac{30}{20} = -\frac{3}{17} = -0.176[/tex]
