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Assignment - Price Elasticity of Demand Questions
Q1. A surge of 60% in gasoline prices resulted in a decline in the purchase of gasoline by 15%. Using the formula of Price Elasticity of Demand, calculate the price elasticity of demand.
Q2. Due to certain food shortages, the prices of cattle surged. In January 2014, a family of four consumed around 10.0 lbs of beef at a price point of $3.47/lb. Due to the price surge, the price went up to $4.45/lb by the end of October 2014, bringing the consumption down to 8.5 lbs. Calculate the price elasticity of demand.
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