Question

The table below shows data about the prices of sedan cars in different years and the sales volumes at those prices. Calculate the price elasticity of demand for the years 1910 and 1911. Year Retail price Sales volume 1908 850 5,986 1909 950 12,292 1910 780 19,293 1911 690 40,402 1912 600 78,611 1913 550 182,809 1914 490 260,720 1915 440 355,276 1916 360 577,036

Answer 1

Price elasticity of demand is the measurement of percentage change in quantity demanded in response to a given percentage change in own price of the commodity.
Elasticity of demand for year 1910=(-)difference in quantity demand/initial demand*100 and divided by difference in price/initial price *100.=(-)780-950/950*100 whole divided by 19293-12292/12292*100=0.31.
Elasticity of demand for year 1911=(-) 690-780/780*100 whole divide by 40402-19293/19293*100=0.10.