Calculate the price elasticity of demand?

Assignment Help Econometrics

Reference no: EM13174519

The initial price of a cup of coffee at a local gas station on is $1, and at that price, 400 cups are demanded each day. If the price falls to $0.90 a cup, the quantity demanded will increase to 500 cups a day.

a) Calculate the price elasticity of demand for coffee from this data.

b) Based on your answer, is the demand for coffee elastic or inelastic at this gas station?

Reference no: EM13174519

Questions Cloud

What factors affected national income : WHAT FACTORS AFFECTED NATIONAL INCOME, UNEMPLOYMEY RATE AND INFLATION RATE WHAT FACTORS EFFECT EACH OF THESE ECONOMIC VARIABLES?

What was the economic basis for the fed''s policy actions? : WHAT IMPACT DID THE POLICY ACTIONS HAVE ON THE FED FUNDS RATE? WHAT WERE THE FED'S CONCERNS FOR ECONOMIC GROWTH, HIGH UNEMPLOYMENT, PRICE STABILITY , INTERNATIONAL BALANCE.

What is the current inflation rate? : WHAT IS THE CURRENT AVERAGE NATIONAL INCOME? WHAT IS THE CURRENT UNEMPLOYMENT RATE? WHAT IS THE CURRENT INFLATION RATE?

Calculate the optimal output and profit : Suppose that Saudi Arabia lets other members of OPEC sell all the oil they want at the existing price which the Saudis set and other members accept. The daily world demand for OPEC oil is given by:P = 88 2Q

Calculate the price elasticity of demand? : The initial price of a cup of coffee at a local gas station on is $1, and at that price, 400 cups are demanded each day. If the price falls to $0.90 a cup, the quantity demanded will increase to 500 cups a day.

Explain equation of the demand curve : Based on the demand curve for asparagus above, what is the relationship between asparagus and good Z? What is the equation of the demand curve for asparagus if the price of good Z is $20?

Explain sources of growth in the economy : List at least four sources of growth in the economy along with two examples of each source. Explain what it contains and why these sources are important.

Rankof the countries according to gdp : Rank the countries according to GDP per person in the most recent year for which you collected data. List the countries with the 10 highest levels of GDP per person. Has the composition of the 10 richest countries changed since 1970?

How does the consumption of the two goods change? : How does your consumption of the two goods change? How does your response depend on income and substitution effects? Can you afford the bundle of soda and pizza you consumed before the price changes?

User Account

All Pages