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

Finding concavity, my q is dat how can we find mathematically dat a product...

my q is dat how can we find mathematically dat a production function is concave?

Real business cycles, REAL BUSINESS CYCLES: The extent of this module ...

REAL BUSINESS CYCLES: The extent of this module is partly indicated in the title. It is about real business cycle (RBC) theory. In addition, it exposes you to New Classical Bu

Rubenstein''s model in Game theory, What is Rubenstein''s model in Game the...

What is Rubenstein''s model in Game theory? A Rubinstein bargaining model is mainly refers to class of bargaining games which is main feature of alternating offers through an infi

Find the price elasticity of demand of good, Consider a consumer with the f...

Consider a consumer with the following Cobb-Douglass utility function: U (x, y) = x α y 1-α a)  Find the Marshallian Demand for both goods. b)  Find the Price Elasticit

Consumer choice involving risk, CONSUMER CHOICE INVOLVING RISK: The tr...

CONSUMER CHOICE INVOLVING RISK: The traditional theory of consumer behaviour does not include an analysis of uncertain situation. Von Neumann and Morgenstern showed that under

Methodology of econometrics, Methodology of econometrics involving three st...

Methodology of econometrics involving three stages 1. Specification of the model using a specific stochastic equation, together with a priori theoretical expectations about th

Carbon tax, Carbon Tax: An environmental tax that is imposed on products th...

Carbon Tax: An environmental tax that is imposed on products that utilize carbon-based materials and thus contribute to greenhouse gas pollution (comprisinggas, oil, coal and other

Define Gibb''s Energy, Gibb''s energy In every chemical system, the substa...

Gibb''s energy In every chemical system, the substance moves in a direction in which there is a decrease in free energy, for example i.e. ?G is negative. G = H - TS where, G is

Pareto optimacy, what are criteria and conditions for pareto optimacy

what are criteria and conditions for pareto optimacy

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