Suppose that during the past year, the price of a laptop computer fell from $2,300 to $2,030. During the same time period, consumer sales increased from 425,000 to 578,000 laptops. Calculate the elasticity of demand between these two price-quantity combinations by using the following steps. After each step, complete the relevant part of the table with the appropriate answers. (Note: For decreases in price or quantity, enter values in the Change column with a minus sign.) Original New Average Change Percentage Change Quantity Price 2$ $ 2$ Step 1: Fill in the appropriate values for original quantity, new quantity, original price, and new price. Step 2: Calculate the average quantity by adding the original quantity and the new quantity, and then dividing by two. Do the same for the average price. Step 3: Calculate the change in quantity by subtracting the original quantity from the new quantity. Do the same for the change in price. pange in quantity by the average quantity. Do the same to calculate 0.41 Step 4: Calculate the percentage change in quantity demanded by dividir the percentage change in price. 1.22 Step 5: Calculate the price elasticity of demand by dividing the percentag 2.45 e in quantity demanded by the percentage change in price, ignoring the negative sign. 4.89 Using the midpoint method, the elasticity of demand for laptops is about
Suppose that during the past year, the price of a laptop computer fell from $2,300 to $2,030. During the same time period, consumer sales increased from 425,000 to 578,000 laptops. Calculate the elasticity of demand between these two price-quantity combinations by using the following steps. After each step, complete the relevant part of the table with the appropriate answers. (Note: For decreases in price or quantity, enter values in the Change column with a minus sign.) Original New Average Change Percentage Change Quantity Price 2$ $ 2$ Step 1: Fill in the appropriate values for original quantity, new quantity, original price, and new price. Step 2: Calculate the average quantity by adding the original quantity and the new quantity, and then dividing by two. Do the same for the average price. Step 3: Calculate the change in quantity by subtracting the original quantity from the new quantity. Do the same for the change in price. pange in quantity by the average quantity. Do the same to calculate 0.41 Step 4: Calculate the percentage change in quantity demanded by dividir the percentage change in price. 1.22 Step 5: Calculate the price elasticity of demand by dividing the percentag 2.45 e in quantity demanded by the percentage change in price, ignoring the negative sign. 4.89 Using the midpoint method, the elasticity of demand for laptops is about
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Suppose that during the past year, the price of a laptop computer fell from $2,300 to $2,030. During the same time period, consumer sales increased
from 425,000 to 578,000 laptops.
Calculate the elasticity of demand between these two price-quantity combinations by using the following steps. After each step, complete the relevant
part of the table with the appropriate answers. (Note: For decreases in price or quantity, enter values in the Change column with a minus sign.)
Original
New
Average
Change
Percentage Change
Quantity
Price
$
Step 1: Fill in the appropriate values for original quantity, new quantity, original price, and new price.
Step 2: Calculate the average quantity by adding the original quantity and the new quantity, and then dividing by two. Do the same for the average
price.
Step 3: Calculate the change in quantity by subtracting the original quantity from the new quantity. Do the same for the change in price.
Step 4: Calculate the percentage change in quantity demanded by dividir
hange in quantity by the average quantity. Do the same to calculate
0.41
the percentage change in price.
1.22
Step 5: Calculate the price elasticity of demand by dividing the percentag 2.45 e in quantity demanded by the percentage change in price, ignoring
the negative sign.
4.89
Using the midpoint method, the elasticity of demand for laptops is about
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