Tuesday

September 2, 2014

September 2, 2014

Posted by **Randy** on Wednesday, November 19, 2008 at 10:26am.

Thank You

Suppose the price of apples rises from $3.50 a pound to $4.00 and your consumption of apples drops from 30 pounds of apples a month to 20 pounds of apples. Calculate your price elasticity of demand of apples. What can you say about your price elasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic? Be sure to show the work.

- Economics -
**drwls**, Wednesday, November 19, 2008 at 10:34amIf the percent drop in consumption exceeds the percent increase in price. the demand is elastic. That is the case in your example.

See

http://en.wikipedia.org/wiki/Price_elasticity_of_demand

- Economics -
**Randy**, Wednesday, November 19, 2008 at 10:37amCould you please show me the workout on this ? Thank You

- Economics -
- Economics -
**economyst**, Wednesday, November 19, 2008 at 10:58amPrice elasticity is the percentage change in price divided by the percentage change in quantity.

%change in P = 100*(.50/3.50) =14.29

%change in Q = 100*(-10/30) = -33.33

Elasticity therefore is -33.33/14.29 = -2.33

Since elasticity is > 1 (absolute value) it is elastic.

(Note: some economists prefer the mid-point method for calculating percentage change. here %change P is .5/3.75 and %change Q is -10/25).

- Economics -
**Randy**, Wednesday, November 19, 2008 at 11:39amThank You :)

- Economics -

**Answer this Question**

**Related Questions**

economics - Suppose the price of apples rises from $3.50 a pound to $4.00 and ...

business - Suppose the price of apples rises from $3.50 a pound to $4.00 and ...

economics - Suppose the price of widgets falls from $7 to $5 and consumption of ...

Calculus (demand) - 18) The demand equation is x + 1/6p - 10+0. Compute the ...

econmics - Suppose the price of widgets rises from $7 to $9 and consumption of ...

calculus - 18) The demand equation is x + 1/6p - 10+0. Compute the elasticity of...

economics - You are a painter, and the price of a gallon of paint increases from...

Microeconomics - Suppose you are a painter, and the price of a gallon of paint ...

Ecconomics - Price elasticity of demand.Tell whether is elastic,perfectly ...

home economics - Suppose that 200 gallons of gasoline are demanded at a ...