How do you compute the price elasticity of demand for paint which is $3.00 and it went up .50 more what is the caculations
To compute the price elasticity of demand, you need to know the percentage change in quantity demanded and the percentage change in price. Here's how you can calculate it:
Step 1: Determine the initial quantity demanded and price.
Let's say the initial quantity demanded is Q1 = X units and the initial price is P1 = $3.00.
Step 2: Determine the final quantity demanded and price.
Given that the price increased by $0.50, the final price is P2 = $3.00 + $0.50 = $3.50.
To find the final quantity demanded, you would need additional information about the responsiveness of the demand to price changes (e.g., a demand curve or market data).
Step 3: Calculate the percentage change in quantity demanded.
Percentage change in quantity demanded can be calculated using the formula:
[(Q2 - Q1) / ((Q1 + Q2) / 2)] * 100
Step 4: Calculate the percentage change in price.
Percentage change in price can be calculated using the formula:
[(P2 - P1) / ((P1 + P2) / 2)] * 100
Step 5: Compute the price elasticity of demand.
The price elasticity of demand (PED) is the percentage change in quantity demanded divided by the percentage change in price:
PED = (percentage change in quantity demanded) / (percentage change in price)
Please note that without knowing the final quantity demanded, you won't be able to calculate the exact price elasticity of demand.