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?."
Take a shot, what do you think. Hint: price elasticity is (%change in quantity demanded)/(%change in price)
select a country and an economic concern, such as population, unemployment, etc. Search the Library and Internet for data sets for the concern that you have chosen.
Where were you able to find data sets?
What is the relationship between the variable that you selected and the economy?
What trends do you see in the data sets? Support your assertions of trends with statistical evidence.
To calculate the price elasticity of demand of apples, we use the formula:
Price Elasticity of Demand = Percentage Change in Quantity Demanded / Percentage Change in Price
First, let's calculate the percentage change in quantity demanded:
Percentage Change in Quantity Demanded = ((New Quantity Demanded - Old Quantity Demanded) / Old Quantity Demanded) x 100
In this case, the old quantity demanded is 30 pounds, and the new quantity demanded is 20 pounds.
Percentage Change in Quantity Demanded = ((20 - 30) / 30) x 100 = (-10/30) x 100 = -33.33%
Next, let's calculate the percentage change in price:
Percentage Change in Price = ((New Price - Old Price) / Old Price) x 100
In this case, the old price is $3.50 and the new price is $4.00.
Percentage Change in Price = (($4.00 - $3.50) / $3.50) x 100 = ($0.50 / $3.50) x 100 = 14.29%
Now, we can calculate the price elasticity of demand using the formula:
Price Elasticity of Demand = (-33.33% / 14.29%)
Price Elasticity of Demand ≈ -2.33
The price elasticity of demand of apples is -2.33.
When the price elasticity of demand is greater than 1, demand is considered to be elastic. This means that a change in price has a relatively strong impact on the quantity demanded. In this case, the price elasticity of demand of apples is -2.33, which means that a 1% increase in price would lead to a 2.33% decrease in quantity demanded, and vice versa. Therefore, the price elasticity of demand of apples is elastic.