Problems using point elasticity, Microeconomics

Assignment Help:

Problems Using Point Elasticity

- We may need to compute price elasticity over portion of demand curve instead of at a single point.

- The price and quantity used as base will alter price elasticity of demand.

Point Elasticity of Demand: An Example

-Assume that

  • Price rises from 8$ to $10 quantity demanded falls from 6 to 4
  • The percent change in price equals: $2/$8 = 25% or $2/$10 = 20%
  • The percent change in quantity equals: -2/6 = -33.33% or -2/4 = -50%

 Elasticity equals:

 -33.33/.25 = -1.33 or -.50/.20 = -2.54

-Which one is correct out of these?  


Related Discussions:- Problems using point elasticity

Calculate wi’s cost of debt and wacc, 1.    Introduction Wood Investm...

1.    Introduction Wood Investments (WI) is a private equity fund that specialises in the leveraged acquisition of publicly-quoted companies with the intention of producing h

Demand of pepsi cola goes up, If the quantity demanded of Pepsi Cola goes u...

If the quantity demanded of Pepsi Cola goes up, and its supply enhances what will occur in the market for Pepsi?

Consumer behaviour, discuss how economic theory of marginal utility explain...

discuss how economic theory of marginal utility explains the optimum pattern of consumption for an individual consumer

Reducing risk, Reducing Risk Three methods consumers attempt to reduce ...

Reducing Risk Three methods consumers attempt to reduce the risk are:  1) Diversification  2) Insurance  3) Collecting more information

Quality control - export strategy, Quality Control: Standards and sta...

Quality Control: Standards and standardisation, quality systems, certification and inspections, measurement systems, testing laboratories, their accreditation and calibration

Wages, What is the difference between wages and salaries

What is the difference between wages and salaries

Demand curve, how does the charging the monoply a specific tax per unit aff...

how does the charging the monoply a specific tax per unit affect the monopoly optmum and 5the welfare of consumer

Criticism of opportunity cost, Normal 0 false false false ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Find contract curve, Consider two individuals  M and F who must split 20 un...

Consider two individuals  M and F who must split 20 units of good X and 10 units of good Y. Suppose we can represent M's preference with the utility function Um =X ^2 mYm and Fs

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd