Question 5 5.1. Suppose that the price of whiskey increases from R100 to R150 a bottle and as a result the quantity demanded decreases from 1 100 bottles to 800 bottles. 5.1.1. Use the ARC (midpoint) formula to calculate the price elasticity of demand for whiskey. 5.1.2. Based on the calculated elasticity value in 5.1.1, indicate whether the demand in the market for whiskey is elastic or inelastic. 5.1.3. Based on your answer in 5.1.2, illustrate the elasticity of demand in the market for whiskey. Clearly indicate the correct percentage changes in price and quantity on the elasticity graph.
Question 5 5.1. Suppose that the price of whiskey increases from R100 to R150 a bottle and as a result the quantity demanded decreases from 1 100 bottles to 800 bottles. 5.1.1. Use the ARC (midpoint) formula to calculate the price elasticity of demand for whiskey. 5.1.2. Based on the calculated elasticity value in 5.1.1, indicate whether the demand in the market for whiskey is elastic or inelastic. 5.1.3. Based on your answer in 5.1.2, illustrate the elasticity of demand in the market for whiskey. Clearly indicate the correct percentage changes in price and quantity on the elasticity graph.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
Section: Chapter Questions
Problem 6PA: Suppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000)...
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Transcribed Image Text:Question 5
5.1. Suppose that the price of whiskey increases from R100 to R150 a bottle and as a result the
quantity demanded decreases from 1 100 bottles to 800 bottles.
5.1.1. Use the ARC (midpoint) formula to calculate the price elasticity of demand for
whiskey.
5.1.2. Based on the calculated elasticity value in 5.1.1, indicate whether the demand in the
market for whiskey is elastic or inelastic.
5.1.3. Based on your answer in 5.1.2, illustrate the elasticity of demand in the market for
whiskey. Clearly indicate the correct percentage changes in price and quantity on the
elasticity graph.
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