Problems using point elasticity, Microeconomics

Problems Using Point Elasticity

- We may need to compute price elasticity over portion of demand curve instead of at a single point.

- The price and quantity used as base will alter price elasticity of demand.

Point Elasticity of Demand: An Example

-Assume that

  • Price rises from 8$ to $10 quantity demanded falls from 6 to 4
  • The percent change in price equals: $2/$8 = 25% or $2/$10 = 20%
  • The percent change in quantity equals: -2/6 = -33.33% or -2/4 = -50%

 Elasticity equals:

 -33.33/.25 = -1.33 or -.50/.20 = -2.54

-Which one is correct out of these?  

Posted Date: 10/10/2012 7:39:02 AM | Location : United States

Related Discussions:- Problems using point elasticity, Assignment Help, Ask Question on Problems using point elasticity, Get Answer, Expert's Help, Problems using point elasticity Discussions

Write discussion on Problems using point elasticity
Your posts are moderated
Related Questions
Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Q. Definition of labour force? Labour Force:Total population of working-age people who are willing and able to work and who thus have ‘entered' labour market. Labour force incl

Problem 1 : (a) What are the main assumptions behind the macroeconomic theory of New Classical Economists? (b) Describe the Lucas Supply function and explain its policy imp

What is Game Theory?  Game Theory is a mathematical method of decision-making in which a competitive situation is examined to verify the optimal course of action for an interes

What is development economics? Traditional economics studies the allowance of scarce resources among alternative uses. Development economics seems at the economic, politica

Marginal utility   - It is the measure of the additional satisfaction obtained from consuming one additional unit of good. * Marginal Utility: An instance - The marginal u

1) The $787 billion stimulus package, "American Recovery and Reinvestment Act" passed in Winter 2009 contained a mix of tax rebates, tax credits and increases in various transfer p

The definition of a price maker is a "firm with some power to set the price because the demand curve for its output slopes downward", which in effect, means those firms with a down

Phillips Curve and Inflation-Unemployment in policy making : In the General Theory (Keynes, 1936) we noted that the state of expectations was taken as given. There was, in ad

TYPES OF POLLUTANTS In general the air pollutants can be sub divided into 2 catexampleories: Primary pollutants and Secondary pollutants Primary pollutants These are the poll