Is the demand for paint elastic,inelastic, or unitary?
To determine whether the demand for paint is elastic, inelastic, or unitary, we need to consider the concept of price elasticity of demand. Price elasticity of demand measures the responsiveness of the quantity demanded of a product to a change in its price.
To calculate price elasticity of demand, we use the following formula:
E = (Q2 - Q1) / ((Q2 + Q1) / 2) / (P2 - P1) / ((P2 + P1) / 2)
Where:
E = Price elasticity of demand
Q1 = Quantity demanded at the initial price (P1)
Q2 = Quantity demanded at the new price (P2)
P1 = Initial price
P2 = New price
To determine whether the demand for paint is elastic, inelastic, or unitary, we need to analyze the magnitude of the price elasticity coefficient (E).
- If E > 1, the demand is elastic. In this case, a percentage change in price will result in a larger percentage change in quantity demanded.
- If E < 1, the demand is inelastic. In this case, a percentage change in price will result in a smaller percentage change in quantity demanded.
- If E = 1, the demand is unitary. In this case, a percentage change in price will result in an equal percentage change in quantity demanded.
To determine the actual price elasticity of demand for paint, you would need specific data on the quantity demanded at different price levels. This information can then be used to perform the calculation mentioned earlier.
Please keep in mind that without the specific data, it is difficult to provide a definitive answer regarding the elasticity of demand for paint.