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

Income elasticity, With the recession, average incomes have fallen from $44...

With the recession, average incomes have fallen from $44,375 to $41,720.  Before the recession Groucho's Gizmos sold 600 gizmos a month. As an economics, predict the number of gizm

Draw the 4 individual cost curves on one graph, You are the final voter in ...

You are the final voter in a brand new start-up league, the Ultra Fun Foosball League (UFFL). The directors are looking to you to make the decisions on how many teams to place in a

Rationale in era of globalization, Rationale in era of globalisation: ...

Rationale in era of globalisation: In the present era of globalisation where countries have unprecedented access to international capital flows and where those who have borrow

What do you meant by enclosures, Q. What do you meant by Enclosures? En...

Q. What do you meant by Enclosures? Enclosures: A historic process in Britain and other European countries, in very early years of capitalism, in that lands formerly held and u

Competitive equilibrium will result in a shortage, a) An enhances in the qu...

a) An enhances in the quantity demanded of a good can happen because consumers expect the price of that good to enhance in the near future. b) A price ceiling imposed above the

Dalton''s law of partial pressures, Describe Dalton''s law of partial press...

Describe Dalton''s law of partial pressures, specification of Dalton''s law of partial pressures, Dalton''s law states that, at a given known temperature total pressure exerted b

What is marvins optimal bundle, Marvelous Marvin spends his money on muffin...

Marvelous Marvin spends his money on muffins (m) and a composite good (c) (whose price you may assume is $1 throughout this problem). Marvin's utility is U = m + c and his income (

Explain hard currency, International economic relations also vary, in large...

International economic relations also vary, in large measure, on monetary issues.  You are unlikely to accept the Turkish Lire in payment for your wages in this country, easily bec

Effect of gasoline tax with rebate, Effect of Gasoline Tax with Rebate ...

Effect of Gasoline Tax with Rebate Assume -Income = $9,000 - Price of gasoline = $1

Explain about the term cost function, Explain about the term cost function....

Explain about the term cost function. Cost Functions This function measures the minimum cost of producing a specified level of output for some fixed factor prices. Likewise

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