The table below shows monthly individual consumer demand schedule for gasoline. Without calculating the price elasticity of demand coefficients find out on which portion of the curve demand is elastic and on which portion it is inelastic. Prove the answers with corresponding calculations in the blank table column below (5 points).
Points 
Price/gallon ($) 
Q_{d} (gallons) 
Corresponding Calculations 
A 
6 
20 

B 
5 
38 

C 
4 
54 

D 
3 
72 

E 
2 
95 

F 
1 
120 
Portion AB (underline the appropriate answer): elastic, inelastic, unitelastic
Portion BC (underline the appropriate answer): elastic, inelastic, unitelastic
Portion CD (underline the appropriate answer): elastic, inelastic, unitelastic
Portion DE (underline the appropriate answer): elastic, inelastic, unitelastic
Portion EF (underline the appropriate answer): elastic,
inelastic, unitelastic
If Samsung cuts the price of its 128GB USB flash drive from $120 to $90 and, as a result, its daily quantity demanded goes up from 32,000 to 48,000 units, then what would be the price elasticity of demand for this product? Provide the full interpretation of this calculated price elasticity of demand coefficient. (5 points)
a) Price elasticity of demand = Percentage change in QD/Percentage change in Price
=[Q2Q1/(Q2+Q1/2)] / [P2P1/(P2+P1/2)]
Point AB = [3820/(38+20/2)]/[56/(5+6/2)] = [18/24]/[1/5.5] = 4.14 = Elastic
Point BC = 5434/(54+34/2) / 45/(4+5/2) = 20/46 / 1/4.5 = 1.95 =Elastic
Point CD = 7254/(72+54/2) / 34/(3+4/2) = 18/63 / 1/3.5 = 1= Unitary Elastic
Point DE = 9572/(95+72/2) / 23/(2+3/2) = 23/83.5 / 0.4 = 0.68 = Inelastic
Point EF = 12095/(120+95/2) / 12/(1+2/2) = 25/107.5 / 1/1.5 = 0.03 = Inelastic
b) Price elasticity of demand:
=[4800032000/(48000+32000/2)] / [90120/(90+120/2)]
=[16000/40000] / [30/105]
=0.4/0.2857
=1.40
As the price elasticity is greater than 1 so price elasticity of demand for USB flash drive is elastic and so decreasing the price will result in an increase in quantity demanded and an increase in total revenue.
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