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?