Question

Consider the following combinations of price and quantity demanded for an unnamed good. These questions ask you to perform several percentage change an elasticity calculations. When calculating percentage change, some questions ask you to use the traditional formula and some ask you to use the midpoint formula. For clarity, these two formulas are given below. The values you calculate should be between -100 and 100 (not -1 to 1). Please include the sign (if negative) in all of your responses. Round answers to one decimal place for percent changes and two decimal places for elasticities.

Traditional formula for percentage change in X: X 2 − X 1 X 1 × 100

Midpoint formula for percentage change in X: X 2 − X 1 X ¯ × 100 , w h e r e X ¯ = X 1 + X 2 2

Price | Quantity Demanded |

100 | 350 |

150 | 250 |

**Q 1.1:** Suppose the price of a winter jacket
increases from 100 to 150. What is the percentage change in the
price using the traditional formula? (2 points)

**Q 1.2:** Suppose the price of a winter jacket
decreases from 150 to 100. What is the percentage change in the
price using the traditional formula? (2 points)

**Q 1.3:** What is the percentage change in price
from 100 to 150 calculated using the midpoint formula?

**Q 1.4:** What is the percentage change in price
from 150 to 100 calculated using the midpoint formula?

**Q 1.5:** What is the price elasticity of demand
as price moves from 100 to 150 using the midpoint formula?

**Q 1.6:** What is the price elasticity of demand
as price moves from 150 to 100 using the midpoint formula?

**Q 1.7:** Is demand for this good elastic,
inelastic, or unit elastic between these two prices?

Answer #1

Consider the following combinations of price and quantity
demanded for an unnamed good. These questions ask you to perform
several percentage change an elasticity calculations. When
calculating percentage change, some questions ask you to use the
traditional formula and some ask you to use the midpoint formula.
For clarity, these two formulas are given below. The values you
calculate should be between -100 and 100 (not -1 to 1). Please
include the sign (if negative) in all of your responses....

16. At a price of $4, quantity demanded is 100; and at a price
of $6, quantity demanded is 120. Using the midpoint formula, the
price elasticity of demand is ________ and demand is ________.
A) 0.1; inelastic
B) 0.45; inelastic
C) -2.2; elastic
D) -10; elastic

1.) Suppose if the price of a good is $12, the quantity demanded
is 50 units; when the price is $10, the quantity demanded is 100
units. Use the midpoint approach to compute the price elasticity of
demand. Is demand at this point relatively responsive or relatively
unresponsive to price changes?
2.) For this exercise you will need to first build a graph to
these specifications: Draw a downward sloping demand curve with
vertical intercept (0,4) and horizontal intercept (8,0)....

4. a) On Tuesday, price and quantity demanded are $7 and 120
units, respectively. A week later, price and quantity demanded are
$6 and 150 units, respectively. What is the price elasticity of
demand between the price of $7 and the price of $6? Use both the
mid-point formula method and the percentage change method. b) The
numbers from both methods are a bit different but their
interpretation is the same. Interpret this elasticity. (i.e. is it
elastic or inelastic...

When the price of Milo increases from RM2 to RM3, the quantity
demanded decreases from 200 to 150 glasses per month. The demand
for Nescafe increases from 50 to 100 glasses per month. (a)
Calculate the price elasticity of demand using the midpoint
formula. [10 marks] (b) If the price of Milo decreases, what will
happen to the total revenue of Milo? Explain. [8 marks] (c)
Calculate the cross elasticity of demand between Milo and Nescafe.
Based on the answer,...

Cross-price elasticity of demand is calculated as
the
total percentage change in quantity demanded divided by the total
percentage change in price.
percentage change in the price of good 1 divided by the percentage
change in the price of good 2.
percentage change in quantity demanded divided by the percentage
change in income.
percentage change in quantity demanded of good 1 divided by the
percentage change in the price of good 2.

The price of a large pizza decreased from $18.00 to $14.00. As a
result, the quantity demanded of skateboards increased from 250.00
to 270.00.
1st attempt
Part 1 (1 point)
See Hint
Using the midpoint formula, what is the percentage change
observed for the price of a large pizza? Give your answer to two
decimal places.
%
Part 2 (1 point)
See Hint
Using the midpoint formula, what is the percentage change
observed for the quantity demanded of skateboards? Give your answer...

A price change causes the quantity demanded for a good to
increase by 20 percent and the total revenue of that good decreases
by 15 percent. What can you say about the price elasticity of
demand at this point.
It's elastic
It's inelastic
It's unitary elastic
It's perfectly elastic

8.
When the price increases by 30 percent and the quantity demanded
drops by 30 percent, the price elasticity of demand is
unitary elastic.
elastic.
perfectly inelastic.
inelastic.
perfectly inelastic.
9.
If the cross-price elasticity of demand between Good A and Good
B is 2 and the percentage change in price of Good A is 5 percent,
what is the percentage change in quantity demanded of Good B?
-3 percent
1.50 percent
10 percent
3 percent
-1.25 percent

II-0. Suppose that your demand schedule for Movie is as
below.
Price
Quantity Demanded when income =$10,000
Quantity Demanded when income =$20,000
$5
50
60
$7
40
55
$9
30
50
$11
20
45
$13
10
40
Now the movie ticket price is $7 each. If the ticket price rises
to $9 each,
Calculate the price elasticity of demand using midpoint method
when your income is $10,000.
Step 1
How much is the change in quantity
demanded?
What is the...

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