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Question 1

Suppose that a store decreases the price of cereal from $4 to $3.4. As a result, quantity demanded increases from 200 to 260.

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 $4.2 to $3.7. As a result, quantity demanded increases from 200 to 230.

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 jeans.

PriceQuantity Demanded
$4401
$8393
$12385
$16377
$20369
$24361
$28353
$32345

Suppose that the store increases the price of jeans from $12 to $16.

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 jeans.

PriceQuantity Demanded
$5387
$10367
$15347
$20327
$25307
$30287
$35267
$40247

Suppose that the store increases the price of jeans from $25 to $30.

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

 

Hint




Question 5

Consider the following demand schedule for books.

PriceQuantity Demanded
$8372
$16340
$24308
$32276
$40244
$48212
$56180
$64148

Suppose that the store increases the price of books from $32 to $40.

Based on this information classify the demand curve.

 

Hint