Following an increase in it's price, from 10$ to 12$, the demand for a good falls from 10500 to 8100 units. What elasticity of demand would you estimate from these data? Calculate its value, first by using the general formula (for discrete changes), then by assuming a constant constant elasticity of demand (log formula). Calculate the demand for p=9 (note q9 the quantity for p=9), using the general formula then in log of the elasticity calculated in Now, Knowing the value of the direct price elasticity of demand calculated previously, assuming constant costs and costs and rivals not responding to your price cut, would you have recommended the price cut from 10 to 9?
Following an increase in it's price, from 10$ to 12$, the demand for a good falls from 10500 to 8100 units. What elasticity of demand would you estimate from these data? Calculate its value, first by using the general formula (for discrete changes), then by assuming a constant constant elasticity of demand (log formula). Calculate the demand for p=9 (note q9 the quantity for p=9), using the general formula then in log of the elasticity calculated in Now, Knowing the value of the direct price elasticity of demand calculated previously, assuming constant costs and costs and rivals not responding to your price cut, would you have recommended the price cut from 10 to 9?
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...
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Exercise :
Following an increase in it's price, from 10$ to 12$, the demand for a good falls from 10500 to
8100 units.
What
constant elasticity of demand (log formula).
Calculate the demand for p=9 (note q9 the quantity for p=9), using the general formula then in log of the elasticity calculated in
Now, Knowing the value of the direct price elasticity of demand calculated previously, assuming constant costs and
costs and rivals not responding to your price cut, would you have recommended the price cut from 10 to 9?
price cut from 10 to 9 ?
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