Due to the impact of Tropical Storm Harry in the Caribbean, the price of sugar rises from $0.50 to $1.00 per bag and the quantity demanded falls from 120 bags to 40 bags. a) Using your knowledge from Finite Math, show that the price-demand function is ?(?)=−?.??????+?.?? b) Calculate the elasticity of demand for sugar. c) Is sugar elastic, unitary or inelastic in this price range? (HINT: Try about 3 prices in the price-range)

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Due to the impact of Tropical Storm Harry in the Caribbean, the price of sugar rises from $0.50 to $1.00 per bag and the quantity demanded falls from 120 bags to 40 bags.

a) Using your knowledge from Finite Math, show that the price-demand function is

?(?)=−?.??????+?.??

b) Calculate the elasticity of demand for sugar.

c) Is sugar elastic, unitary or inelastic in this price range? (HINT: Try about 3 prices in the price-range)

d) What is the interpretation of that price elasticity of demand?

e) If the price of sugar ($1.00) were to increase by 15%, what would be the percentage change in the quantity demanded?

 

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