Question

Think of a good or service with which you are familiar and for which there has...

  1. Think of a good or service with which you are familiar and for which there has been a recent change in quantity demanded because of a change (up or down) in price.

What is the good or service?

What is your best estimate of the original quantity demanded? New quantity demanded? (please explain your units carefully.) You don’t need to do research: these numbers can be a best “guess.”

What is your best estimate of the original price? New price? (please explain your units carefully.)

What is price elasticity of demand for this good or service? Please show your work.

How does this elasticity compare with others listed in the textbook?

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Homework Answers

Answer #1

The good is crude oil.

best estimate of quantity demanded is  100.1 million barrels per day

new quantity demanded is  1.1.1 million barrels per day.

the original price is 67.31$ and the new price is 63.65$

price elasticity of demand is steeper in nature as demand and price have negative relation but have type of elasticy.

they are :

  • elasticity=0
  • elasticity>1
  • elasticity <1
  • elasticity =1
  • elasticity = infinte

here is the situation of price elasticity >1 but with steeper curve as less subsitute just the subsitute in the suppliers

as change in few price changes demand but with less percentage..

we compare the list in the textbook by the way of change in price to the change in quantity demanded.

price elasticity of demand, e= percentage change in quantity demanded / percentage change in price

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