2232018 Test Canves Homowork 4Principlos of Microoconomics P

2/23/2018 Test Canves: Homowork 4-Principlos of Microoconomics Price Quantity Demanded 20 18 16 14 12 10 2 6 10 Refer to the information above to answer this question.What are the elasticity coefficients for the price ranges $2 to $3 and $8 to $9, respectively?

Solution

Elasticity coefficient = % change in quantity demanded/% change in price.

When price changes from $2 to $3, quantity demanded changes from 18 to 16. So, % change in price = (3-2)/2 * 100 = 1/2*100 = 50%

% change in quantity demanded = (16-18)/18*100 = -2/18*100 = -1/9 * 100 = -11.11%.

So, elasticity coefficient = % change in quantity demanded/% change in price = -11.11%/50% = -0.22

When price changes from $8 to $9, quantity demanded changes from 6 to 4. So, % change in price = (9-8)/8 * 100 = 1/8*100 = 12.5%

% change in quantity demanded = (4-6)/6*100 = -2/6*100 = -1/3 * 100 = -33.33%.

So, elasticity coefficient = % change in quantity demanded/% change in price = -33.33%/12.5% = -2.67