HELPPPP Calculate the elasticity of demand at prices 8 5 3 P

HELPPPP

Calculate the elasticity of demand at prices $8, $5, $3 Price Quantity Purchased $10 10 Round answer to three places after decimal. Elasticity at p $8: Elasticity at p $5: Elasticity at p $3:

Solution

Elasticity of demand = ( q2 - q1 / p2 - p1) * (p1 + p2 / q1 + q2)

At p = 8, q1 = 3, q2 = 4, p1 = 8, p2 = 7

Ed = -15/7

= -2.143

At p = 5, p1 = 5, p2 = 4, q1 = 6, q2 = 7

Ed = - 9/13 = -0.692

At p =3, p1 = 3, p2 = 2, q1 = 8, q2 = 9

Ed = -5/17 = -0.294