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What is the price elasticity of demand

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1)When P=5, quantity is Q=100 When P=10, quantity is Q=55  What is the elasticity of demand? Show your work. What are the factors that determine the elasticity of demand? Just list these factors.

2) a.   Anna owns the Sweet Alps Chocolate store. She charges $10 per pound for her hand made chocolate. You calculated the elasticity of demand for chocolate in her town to be 2.5. If she wants to increase her total revenue, what advice will you give her and why? 

b.  If the cross elasticity of demand between peanut butter and milk is -1.11, then are peanut butter and milk substitutes or complements? 

c.    A 10 percent increase in income brings about a 15 percent decrease in the demand for a good. What is the income elasticity of demand and is the good a normal good or an inferior good? 

d.   If the price of a good increases by 8% and the quantity demanded decreases by 12%, what is the price elasticity of demand? Is it elastic, inelastic or unitary elastic?

e.   Discount stores sell relatively elastic goods.  Ceteris paribus, explain why selling at a relatively low price is profitable for them?

Reference no: EM132482517

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