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

Externality, When somebody wearing muddy shoes rides a public bus, he impos...

When somebody wearing muddy shoes rides a public bus, he imposes a negative externality on other riders (passengers get some mud rubbed off on them, and the shoes look ugly). If a

Gains from international trade, Gains from International Trade: It lea...

Gains from International Trade: It leads to increased total world production of goods and services. International trade based on comparative cost advantage allows countries to

Isoquant, if the price of labour is 2000 per hour and the price of capital ...

if the price of labour is 2000 per hour and the price of capital is 1000 per hour.is there an efficiency point of production.

How are consequences of economists used, How are consequences of economists...

How are consequences of economists used? Economists generally use efficiency, information, equilibrium and incentive compatibility like focal points, and examine the consequenc

Americas Dependency on China, What will be the effects of americas dependen...

What will be the effects of americas dependency on china?

Define direct marketing, Direct Marketing This is a marketing tool des...

Direct Marketing This is a marketing tool designed to elicit instant action from the customer through direct contact.

Microeconomics supply and demand curve question, I''m having trouble with t...

I''m having trouble with this problem.....I must have missed the class that it was discussed in. I''m more confused with the interpreting the equations with all the Labor demand/La

1, price falls and demand is elstic

price falls and demand is elstic

Shutdown point, do you agree that according to econmy theory a business wil...

do you agree that according to econmy theory a business will always close if its total reveneu cover total costs

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