Questions 1 and 2 are from Chapter 3 and Questions 3 and 4 are from Chapter 4. 1. (5 points) о Price (dollars) 210 11 A 5 3 B о 200 400 D E 1,000 1,400 1,800 Quantity Demand 2,400 (a) What is the price elasticity of demand at point B? Please show your calculations. (b) What is the arc elasticity of demand between point B and point C? Please show your calculations. 1 Price elasticity at a point is slope Price Quantity Where “slope” is the slope of the demand curve in the above graph which is calculated between any two points on the demand curve using the following formula slope = change in Price change in quantity Arc Price elasticity = Q2-Q1 ((Q₂ + Q₁)/2) P₂-P₁ (P₂+ P₁)/2) 2 (For Arc elasticity see the above formula and the formula on page 83 in "Inside Business 3-2)
Questions 1 and 2 are from Chapter 3 and Questions 3 and 4 are from Chapter 4. 1. (5 points) о Price (dollars) 210 11 A 5 3 B о 200 400 D E 1,000 1,400 1,800 Quantity Demand 2,400 (a) What is the price elasticity of demand at point B? Please show your calculations. (b) What is the arc elasticity of demand between point B and point C? Please show your calculations. 1 Price elasticity at a point is slope Price Quantity Where “slope” is the slope of the demand curve in the above graph which is calculated between any two points on the demand curve using the following formula slope = change in Price change in quantity Arc Price elasticity = Q2-Q1 ((Q₂ + Q₁)/2) P₂-P₁ (P₂+ P₁)/2) 2 (For Arc elasticity see the above formula and the formula on page 83 in "Inside Business 3-2)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Questions 1 and 2 are from Chapter 3 and Questions 3 and 4 are from Chapter 4.
1. (5 points)
о
Price (dollars)
210
11
A
5
3
B
о
200 400
D
E
1,000
1,400
1,800
Quantity
Demand
2,400
(a) What is the price elasticity of demand at point B? Please show your calculations.
(b) What is the arc elasticity of demand between point B and point C? Please show your
calculations.
1
Price elasticity at a point is
slope
Price
Quantity
Where “slope” is the slope of the demand curve in the above graph which is calculated between
any two points on the demand curve using the following formula
slope =
change in Price
change in quantity
Arc Price elasticity =
Q2-Q1
((Q₂ + Q₁)/2)
P₂-P₁
(P₂+ P₁)/2)
2
(For Arc elasticity see the above formula and the formula on page 83 in "Inside Business 3-2)
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