Question

1. There are several ways of Finding out the price elasticity of
demand (e) ;depending on the type of data. (a) Percentage change
formula (b) Mid-point formula (c) Slope of demand: ii. Find
out e using this method for the following demand curves at P= 10: B.Q= 180-3P-0.4P^2

Answer 1

P	Q	a. Percentage change formula	b. Midpoint formula	c. Slope of demand
1	176.6
2	172.4	-0.02	-0.04	-4.2
3	167.4	-0.06	-0.07	-5
4	161.6	-0.10	-0.12	-5.8
5	155	-0.16	-0.19	-6.6
6	147.6	-0.24	-0.27	-7.4
7	139.4	-0.33	-0.37	-8.2
8	130.4	-0.45	-0.50	-9
9	120.6	-0.60	-0.66	-9.8
10	110	-0.79	-0.87	-10.6
11	98.6	-1.04	-1.15	-11.4
12	86.4	-1.36	-1.52	-12.2

a. The percentage change formula at price = 10

= ((120.6-110)/110)/((10-9)/9) = -0.79

b. Mid-Point formula at P= 10,

=((120.6-110)/(120.6+110)/2)/((10-9)/(10+9)/2) = -0.87

c. Slope of demand at P =10

=((120.6-110)/((10-9))) = -10.6