Lumen OHM Assessment

Question 1

Suppose that a store decreases the price of peanut butter from $4.5 to $3.8. As a result, quantity demanded increases from 210 to 270.

Using the mid-point elasticity approach, calculate price elasticity of demand.

Your answer should be expressed in absolute value terms.

Hint

Question 2

Suppose that a store decreases the price of laundry detergent from $4.5 to $3.5. As a result, quantity demanded increases from 210 to 250.

Based on this information, find the price elasticity, which you can use to classify the demand curve as price elastic, unit elastic or inelastic.

Hint

Question 3

Consider the following demand schedule for bags.

Suppose that the store increases the price of bags from $35 to $40.

Using the mid-point approach, calculate the percentage change in quantity demanded.

Make sure that you include a negative sign if necessary.

Hint

Question 4

Consider the following demand schedule for bags.

Suppose that the store increases the price of bags from $10 to $15.

Using the mid-point approach, calculate price elasticity of demanded.

Hint

Question 5

Consider the following demand schedule for jeans.

Suppose that the store increases the price of jeans from $10 to $15.

Based on this information classify the demand curve.

Hint