8.5 Average visits per week equal 640 when the copayment is $40 and 360 when the copayment is $60.
a. Calculate the percentage change in visits, percentage change in price, and price elasticity of demand using 640 and $40 as the denominators for percentage change calculations.
b. Calculate the percentage change in visits, percentage change in price, and price elasticity of demand using 360 and $60 as the denominators for percentage change calculations.
c. Calculate the percentage change in visits, percentage change in price, and price elasticity of demand using 500 and $50 as the denominator for percentage change calculations. (This calculation finds the arc elasticity.)
d. How do your answers differ?
8.6 Sales are 3,100 at a price of $200 and 2,400 at a price of $300. Calculate the price elasticities of demand using $200 as the base value; then use $300 as the base value. Calculate the arc price elasticity and compare the three calculations. How do your answers differ?
8.5 Average visits per week equal 640 when the copayment is $40 and 360 when the copayment is $60.
a. Calculate the percentage change in visits, percentage change in price, and price elasticity of demand using 640 and $40 as the denominators for percentage change calculations.
b. Calculate the percentage change in visits, percentage change in price, and price elasticity of demand using 360 and $60 as the denominators for percentage change calculations.
c. Calculate the percentage change in visits, percentage change in price, and price elasticity of demand using 500 and $50 as the denominator for percentage change calculations. (This calculation finds the arc elasticity.)
d. How do your answers differ?
8.6 Sales are 3,100 at a price of $200 and 2,400 at a price of $300. Calculate the price elasticities of demand using $200 as the base value; then use $300 as the base value. Calculate the arc price elasticity and compare the three calculations. How do your answers differ?
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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)
