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

Disadvantages of division of labour, Disadvantages of division of labour: ...

Disadvantages of division of labour: Division of labour may also have disadvantages that may include the following: (i) Lack of Craftsmanship Division of labour does not m

Determine the optimal number of ads -regression, You work in the front offi...

You work in the front office of the Spokane Indians, a minor league baseball team that plays in the Northwest League of Minor League Baseball. Your boss wants to know the different

#monopoly, Write a 1-2 page summary on markey failure

Write a 1-2 page summary on markey failure

Marginal utility, Marginal utility - It is the measure of the addition...

Marginal utility - It is the measure of the additional satisfaction obtained from consuming one additional unit of good. * Marginal Utility: An instance - The marginal u

Find the monopsony first mover competitive fringe buyer, Draw the suitable ...

Draw the suitable graph for each situation and describe a real world situation in health care in which the market structure utilized in the question may exist. Demand: P=6,000-0

Internal and external economies of scale, Internal and external economies o...

Internal and external economies of scale: Internal economies of scale are the advantages or benefits that the firm enjoys as it expands its size or increases its scale of ope

Copper, Around 2007, the world copper price was $2.00 per pound and 12 mill...

Around 2007, the world copper price was $2.00 per pound and 12 million metric tons per year was the quantity transacted. A) Assume copper’s demand elasticity is -.5 and supply elas

Discriminatory fee structure, Discriminatory Fee Structure This method...

Discriminatory Fee Structure This method discriminates between courses and the economic condition of the family to which the student belongs. The cost of providing the educati

Value chain, V alue Chain It is the collection of activities within...

V alue Chain It is the collection of activities within an organization that allows it to compete within an organization. The activities in a value chain can be grouped into

Bayesian Nash Equilibrium, Consider 2 firms i=1,2 producing quantities q1 a...

Consider 2 firms i=1,2 producing quantities q1 and q2 respectively. Let the market price be given by P=a-b(q1+q2). Firm 1''s Marginal cost c is common knowledge but 2''s cost is no

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages