ANSWER THE FOLLOWING AND BASE ON THE FORMULA GIVEN IN THE IMAGE 1. Trek Inc., which sells bikes, changed the price of their foldable bikes from P3,000 to P3,500. As aresult, the quantity of their product sold went from 700 bikes to 500 bikes. Compute for the priceelasticity of demand. Indicate whether the product’s demand is elastic or inelastic.2. Miko is a collector of matchbox cars. He used to buy five (5) cars every payday. However, whenhis income was raised from P17,000 to P20,000, he started to buy 10 cars. What is the incomeelasticity of demand? Income Elasticity of DemandPercentage change in quantity demandedEpPercentage change in incomeQ2 - Q1% Change in quantity =x 10(Q2 + Q1)/2Iz - l1x 100(I2 + 11)/2% Change in income =Where:Q2 = Current quantityQi= Previous quantityIz = Current income1= Previous income Price elasticity of demandPercentage change in quantity demandedEp :Percentage change in priceQ2 - Q1x 100(Q2 + Q1)/2% Change in quantityР. — Р.% Change in price =(P2 +x 100+ P1)/2Where:Q2 = Current quantityQ1= Previous quantityP2 = Current priceP,= Previous price

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Answered: ANSWER THE FOLLOWING AND BASE ON THE…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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ANSWER THE FOLLOWING AND BASE ON THE FORMULA GIVEN IN THE IMAGE

1. Trek Inc., which sells bikes, changed the price of their foldable bikes from P3,000 to P3,500. As a
result, the quantity of their product sold went from 700 bikes to 500 bikes. Compute for the price
elasticity of demand. Indicate whether the product’s demand is elastic or inelastic.

2. Miko is a collector of matchbox cars. He used to buy five (5) cars every payday. However, when
his income was raised from P17,000 to P20,000, he started to buy 10 cars. What is the income
elasticity of demand?