Estimate the price elasticity coefficient

Reference no: EM1312178

Given below is the demand schedule for books per year for a given family. Use this data to answer the following questions.

Price elasticity of demand	Number of books demanded	Price per book	Total revenue
	0	$20
	10	18
	20	16
	30	14
	40	12
	50	10
	60	8
	70	6
	80	4
	90	2
	100	0

Compute the coefficient of price elasticity for the price ranges given in the schedule and complete the first column of the table.
What do you notice about the algebraic sign of the values you have just computed? Why is this so?
Break the demand schedule into the three ranges of the price-elasticity of demand. (You can only approximate the three ranges.)
Fill the total revenue (spending) column.
How does total spending vary with the price of books in the elastic range? Why?
How does total spending vary with the price of books in the inelastic range?
Total spending attains a maximum value approximately in which range of price elasticity?
Graph the demand curve for books. Explain why the price-elasticity of demand is not equal to the slope of a demand curve.

Interpret the coefficient of the price elasticity that you computed for the seventh price range- $8 to $6.

Reference no: EM1312178

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