Kevin’s friend, Sam, runs a septic tank repair business. Your research shows that the following price and demand for servicing a tank: Current Price: $300 New Price: $375 Current demand: 450 tanks New demand 425 tanks What is the coefficient of elasticity for Sam’s business? Here is the formula for calculating elasticity: Ed = {(Q1-Q2) / [1/2 (Q1+Q2)] } / {(P1-P2) / [1/2 (P1 + P2)]}
Kevin’s friend, Sam, runs a septic tank repair business. Your research shows that the following price and demand for servicing a tank: Current Price: $300 New Price: $375 Current demand: 450 tanks New demand 425 tanks What is the coefficient of elasticity for Sam’s business? Here is the formula for calculating elasticity: Ed = {(Q1-Q2) / [1/2 (Q1+Q2)] } / {(P1-P2) / [1/2 (P1 + P2)]}
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 40P
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Question
Kevin’s friend, Sam, runs a septic tank repair business. Your research shows that the following price and demand for servicing a tank:
Current Price: $300
New Price: $375
Current demand: 450 tanks
New demand 425 tanks
What is the coefficient of elasticity for Sam’s business?
Here is the formula for calculating elasticity:
Ed = {(Q1-Q2) / [1/2 (Q1+Q2)] } / {(P1-P2) / [1/2 (P1 + P2)]}
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