ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
The data below represent a demand schedule.
| Product Price | Quantity Demanded |
|---|---|
| $ 6 | 0 |
| 5 | 1 |
| 4 | 2 |
| 3 | 3 |
| 2 | 4 |
| 1 | 5 |
| 0 | 6 |
Instructions: Round your answers to two decimal places. Enter your answers as positive values (absolute values).
b. Use the midpoint formula for Ed to determine price elasticity of demand for each of the four possible $1 price changes.
Moving from $5 to $4, Ed = .
Moving from $4 to $3, Ed = .
Moving from $3 to $2, Ed = .
Moving from $2 to $1, Ed = .
c. What can you conclude about the relationship between the slope of this demand curve and its elasticity?
The demand curve has a constant slope of , and its elasticity as we move down the curve.
d. Explain in a nontechnical way why demand is elastic in the upper-left segment of the demand curve and inelastic in the lower-right segment.
Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box.
check all that apply
- When the initial price is high and the initial quantity is low, the percentage change in quantity exceeds the percentage change in price, making demand inelastic.
- When the initial price is low and the initial quantity is high, the percentage change in quantity is less than the percentage change in price, making demand elastic.
- When the initial price is low and the initial quantity is high, the percentage change in quantity is less than the percentage change in price, making demand inelastic.
- When the initial price is high and the initial quantity is low, the percentage change in quantity exceeds the percentage change in price, making demand elastic.
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