Yesterday, the price of envelopes was $3 a box, and Julie was willing to buy 10 boxes. Today, the price has gone up to $3.75 a box, and Julie is now willing to buy 8 boxes. Is Julie's demand for envelopes elastic or inelastic? What is Julie's elasticity of demand? Show your calculations for full marks.

so, what is your understanding of what elastic demand means?

To determine whether Julie's demand for envelopes is elastic or inelastic, we can use the concept of price elasticity of demand. Price elasticity of demand measures the responsiveness of quantity demanded to a change in price.

The formula for price elasticity of demand is:

Elasticity = (Percentage change in quantity demanded) / (Percentage change in price)

First, let's calculate the percentage change in quantity demanded:

Change in quantity demanded = Initial quantity demanded - Final quantity demanded
= 10 boxes - 8 boxes
= 2 boxes

Percentage change in quantity demanded = (Change in quantity demanded / Initial quantity demanded) * 100
= (2 boxes / 10 boxes) * 100
= 20%

Next, let's calculate the percentage change in price:

Change in price = Final price - Initial price
= $3.75 - $3
= $0.75

Percentage change in price = (Change in price / Initial price) * 100
= ($0.75 / $3) * 100
= 25%

Now, we can calculate the price elasticity of demand:

Elasticity = (Percentage change in quantity demanded) / (Percentage change in price)
= 20% / 25%
= 0.8

Based on the value of the elasticity coefficient, we can determine the elasticity of demand:
- If the elasticity is greater than 1, demand is elastic.
- If the elasticity is less than 1, demand is inelastic.
- If the elasticity is equal to 1, demand is unit elastic.

In this case, the elasticity coefficient is 0.8, which is less than 1. Therefore, Julie's demand for envelopes is inelastic.