Question

Listed below I give you the elasticity of demand, the % change in

price, and whether price went up or down. Write the number of each

question (15)- (18)and tell me first, the % change in quantity demanded and, second whether quantity demanded went up or down:

   ELASTICITY:    % CHANGE IN PRICE:   

(15)    - 4            went up 4%          

                                             

(16)    - 3            went down 5%          

(17)    - 0.6          went down 10 %           

(18)    - .893         went down 1 %                                                 

Answer 1

Price elasticity of demand is given by Percentage change in Quantity demanded / Percentage change in price.

(15) Price went up by 4%. Thus the demand decreased.

-4 = Change in demand / 4%

-16% is the change in quantity demanded and it went down.

(16) Price went down by 5%. Thus the demand increased

-3 = Change in demand / -5%

15% = Change in demand

(17) -0.6 Price went down by 10%, demand increased

-0.6 = Change in demand / - 10%

6% = Change in demand

(18) Price went down by 1%, demand increased

-0.893 = Change in demand / -1%

0.893% is the change in demand.