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

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

Define the post-communism policy, Policy: Post-Communism Demolition of ...

Policy: Post-Communism Demolition of the Berlin Wall and take-down of the Iron Curtain hasn't significantly improved the situation in what are optimistically and euphemisticall

Monopoly market, 9. The average supernormal profit for the firm is

9. The average supernormal profit for the firm is

Pure monopoly, advantage dis advantage of pure monopoly

advantage dis advantage of pure monopoly

Mathematical presentation of utility maximisation, Mathematical Presentatio...

Mathematical Presentation of Utility maximisation: Consumer's objective is to maximise her utility by solving UMP. To solve UMP, we set the Lagrange function of the correspond

Law of supply, what is the importance of law of supply

what is the importance of law of supply

Concept and meaning of infrastructure, CONCEPT AND MEANING OF INFRASTRUCTUR...

CONCEPT AND MEANING OF INFRASTRUCTURE: Infrastructure sectors are the backbone of a national economy. It has been commonly opined that infrastructure development is closely re

HDI, how to write an assignment on Human development index

how to write an assignment on Human development index

Snob effect - network externalities, The Snob Effect - If network is n...

The Snob Effect - If network is negative externality, a snob effect exists. * The snob effect refers to desire to own unique or exclusive goods. * The quantity demanded o

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