6. [3 Marks] Refer to Table 2. If the price decreases from $40 to $30, what is Eunice's elasticity of demand (using the midpoint method)? A. l = 0.10 B. 20 = 0.5 C. 0.71 D. } = 1.4 E. 40 = 2
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Related questions
| Income | Px | Py | Good X | Good Y |
| $30,000 | $6 | $3 | 2 | 20 |
| $50,000 | $6 | $4 | 5 | 10 |
Refer to Table.
(i) Using the information in the table, calculate the income elasticity of demand for good X and characterize the good. Use the midpoint formula.
(ii) Can you calculate the income elasticity of demand for good Y? If you can, show your calculation and characterize the good. If you cannot, explain why.
In this question, we will determine the price elasticity of demand using both the coefficient of elasticity and the total revenue test.
Use the demand schedule in the table below to answer the following questions.
| Quantity Demand | Price |
| 10 | 200 |
| 20 | 150 |
| 30 | 100 |
| 40 | 50 |
| 50 | 25 |
a) Calculate the total revenue for each row in the demand schedule. indicate whether total revenue increases or decreases between each row int eh demand schedule. use the total revenue test to classify each price/quantity change as elastic, inelastic, or uni-elastic.
b) calculate the own price-elasticity coefficient for each row in the demand schedule. use the coefficients you calculate to classify each price/quantity change as elastic, inelastic, unit elastic.
in your answer it will be useful to recall that the midpoint formula for percentage change is:
%change midpoint = (final - initial) / ((finial + initial)/2)
and own price elasticity can be calculated by using the formula
Ed= (percentage change in quantity demand of product x) / (percentage change the in the price of product x)
suppose that your demand schedule for pizza is as follows:
|
Price
|
Quantity of Pizzas Demanded
|
Quantity of Pizzas Demanded
|
|---|---|---|
|
(Dollars)
|
(Income = $20,000)
|
(Income = $24,000)
|
| 8 | 40 | 50 |
| 10 | 32 | 45 |
| 12 | 24 | 30 |
| 14 | 16 | 20 |
| 16 | 8 | 12 |
1. Using the midpoint method, your price elasticity of demand as the price of pizzas increases from $10 to $12 is______if your income is $20,000 and________ if your income is $24,000.
2. If the price of a pizza is $10, your income elasticity of demand is ______ as your income increases from $20,000 to $24,000. However, if the price of a pizza is $12, your income elasticity is _______.
