1000 Lecture 11: Question 1 Mathematica
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PROBLEM SET ONE -2 - PRICE-ELASTICITY OF DEMAND
| P1 | P2 | QD1 | QD2 | I | II | III | IV | V |
1 | 1 | 2 | 10 | 5 | |||||
2 | 5 | 3 | 40 | 90 | |||||
3 | 12 | 20 | 200 | 200 | |||||
4 | 3 | 2 | 9 | 9 | |||||
5 | 0.40 | 1.40 | 30 | 15 | |||||
6 | 1.2 | 4.0 | 20 | 15 | |||||
7 | 7.5 | 4.6 | 40 | 30 | |||||
8 | 5 | 5.000â¦01 | 1x106 | 0 | |||||
9 | 5 | 4.9999â¦. | 10 | 1x109 | |||||
10 | 6 | 12 | 12 | 6 | |||||
11 | 18 | 36 | 360 | 180 | |||||
12 | 7 | 15 | 24 | 16 | |||||
13 | 7 | 16 | 78 | 78 | |||||
14 | 25 | 65 | 150 | 100 | |||||
15 | 65 | 91 | 1300 | 780 | |||||
16 | 4 | 5 | 21 | 11 | |||||
17 | 8 | 4 | 30 | 54 | |||||
18 | 140 | 275 | 625 | 495 | |||||
19 | 78 | 91 | 780 | 780 | |||||
20 | 91 | 78 | 780 | 780 |
Column I - determine the Price-Elasticity of Demand Coefficient. Find material in Chapter 6 and the Powerpoint of Elasticity Chap 004 19e.ppt
change in quantity demanded change in price
ED = ---------------------------------------- â ----------------------------
sum of quantities demanded / 2 sum of prices / 2
The data in the first four columns represent price (P) and quantity demanded (Qd) in time 1 (before change in price) and time 2 (after change in price). Note that results should be expressed in absolute terms (see paragraph Elimination of Minus Sign). For example, -1 should be expressed as â1â.
Column II â Based on topic concerning Interpretations of ED, indicate which applies based on how the quantity demanded changed subsequent to a change in price (elastic, inelastic, etc.)
Column III - you need to determine if the good in question would be considered a necessity, a luxury or neither.
Column IV â Indicate, in monetary terms, how much is the change in total revenue or total expenditure (TR = P X QD), from the first price level to the second.
Column V - the direction of the change, also in monetary terms, that is, increasing or decreasing, and by how much? (show a + sign for increasing and a â sign for decreasing).
Note: for any monetary result please include the applicable currency symbol ($, â¬, etc.)