Calculate the exact elasticity of demand

Reference no: EM13223017

1.Economics/Math Practice-Use the following demand schedule to draw a demand curve. Then find and label a combination of output and price that could result from: (a) an increase in the quantity demanded, (b) an increase in demand, and (c) a decrease in demand.
Price Quantity Demanded
$1.00 250
$2.00 200
$3.00 150
$4.00 100
$5.00 50

2. calculate the exact elasticity of demand in the following examples: Then tell if, in each case, demand is elastic, inelastic, or unitary elastic. (a) When the price of a deluxe car wash rises from $10.00 to $11.00, the number of daily customers falls from 60 to 48. (b) A dentist with 80 patients cuts his fee for a cleaning from $60.00 to $54.00 and attracts two new patients.

FORMULA: Elastic Demand
If demand is elastic, a small change in price leads to a relatively large change in the quantity demanded. Follow this demand curve from left to right.
$ 4 - $3 x 100 = 25
$4
10 - 20 x 100 = 100
10
100% = 4.0
25%
The price decreases from $4 to $3, a decrease of 25 percent.
Elasticity of demand is equal to 4.0. Elasticity is greater than 1, so demand is elastic. In this example, a small decrease in price cause a large increase in the quantity demanded.

Reference no: EM13223017

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