Calculate the exact elasticity of demand

Assignment Help Econometrics

Reference no: EM13223017

1.Economics/Math Practice-Use the following demand schedule to draw a demand curve. Then find and label a combination of output and price that could result from: (a) an increase in the quantity demanded, (b) an increase in demand, and (c) a decrease in demand.
Price Quantity Demanded
$1.00 250
$2.00 200
$3.00 150
$4.00 100
$5.00 50

2. calculate the exact elasticity of demand in the following examples: Then tell if, in each case, demand is elastic, inelastic, or unitary elastic. (a) When the price of a deluxe car wash rises from $10.00 to $11.00, the number of daily customers falls from 60 to 48. (b) A dentist with 80 patients cuts his fee for a cleaning from $60.00 to $54.00 and attracts two new patients.

FORMULA: Elastic Demand
If demand is elastic, a small change in price leads to a relatively large change in the quantity demanded. Follow this demand curve from left to right.
$ 4 - $3 x 100 = 25
$4
10 - 20 x 100 = 100
10
100% = 4.0
25%
The price decreases from $4 to $3, a decrease of 25 percent.
Elasticity of demand is equal to 4.0. Elasticity is greater than 1, so demand is elastic. In this example, a small decrease in price cause a large increase in the quantity demanded.

Reference no: EM13223017

Questions Cloud

What would the cash flow diagram look like : If an alternative has monthly payments of $10,000 a month for three years with a purchase price of $75,000 at the end of year three, what would the cash flow diagram look like. what would the cash flow diagram look like

What are some possible reference sources : worst-case and alternate scenarios require a plume projection to be developed showing the potential area impacted by a release. What are some possible reference sources (you) could use in determining the impacted areas and populations.

Advantages and disadvantages of a manufacturing company : What are the advantages and disadvantages of a manufacturing company owning and operating its own outbound warehouse compared to having a logistics service provider (LSP) providing the warehousing capacity and performing the operations?

Effective recruitment andnorganizations gain competitive : Effective recruitment and selection help organizations gain competitive advantages

Calculate the exact elasticity of demand : calculate the exact elasticity of demand in the following examples: Then tell if, in each case, demand is elastic, inelastic, or unitary elastic. (a) When the price of a deluxe car wash rises from $10.00 to $11.00, the number of daily customers fa..

Overview of ethical issues in marketing and research process : Find a company/organization who has misused statistics or who has been unethical in their marketing research. Write a case study about that experience, citing clearly and providing examples.

How american airlines uses in order to reduce costs : discuss the techniques on how American Airlines uses in order to reduce costs and increase profits. The task for this activity goes beyond inventory management (although inventory management may be one technique) please answer with 150 words.

Case dollar general uses integrated software : Case: Dollar General Uses Integrated Software

How do courage and morals affect leadership and leadership : Your management team has been retained by a senior manager who is concerned about the effectiveness of his managers and their leadership abilities.

User Account

All Pages