Please write the attached text in handwriting with the writing (masa tarabeh) at the beginning of the page Elasticity is defined as the ratio ofpercentage(%) change in the quantity due topercentage(%) change in the price, or in otherwords it basically implies the degree ofresponsiveness of percentage(%) change inquantity demanded to the % change in price.Elasticity is of 3 types:• Elastic• Inelastic• Unit ElasticStep2b)Elasticity is calculated with the given formula:Elasticity=% change in quantity demanded% change in priceOPdPOPdPwhere,P = PriceQ = QuantitydP/dQ = slope of the demand curveSubstituting the value in the given formula,one can get:100ed =40= - 1. 25leal = 1. 25The absolute value of elasticity is 1.25 which isgreater than 1, which implies that it is elasticin nature, which means that as price changes,quantity changes more than proportionate.

The %change in Q to %change in P depicted by “E”. “E” can be measured by: · Proportionate…

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Elasticity is defined as the ratio of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Please write the attached text in handwriting with the writing (masa tarabeh) at the beginning of the page

Elasticity is defined as the ratio of
percentage(%) change in the quantity due to
percentage(%) change in the price, or in other
words it basically implies the degree of
responsiveness of percentage(%) change in
quantity demanded to the % change in price.
Elasticity is of 3 types:
• Elastic
• Inelastic
• Unit Elastic
Step2
b)
Elasticity is calculated with the given formula:
Elasticity=
% change in quantity demanded
% change in price
OP
dP
OP
dP
where,
P = Price
Q = Quantity
dP/dQ = slope of the demand curve
Substituting the value in the given formula,
one can get:
100
ed =
40
= - 1. 25
leal = 1. 25
The absolute value of elasticity is 1.25 which is
greater than 1, which implies that it is elastic
in nature, which means that as price changes,
quantity changes more than proportionate.

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