11. The relationship between price and quantity demanded for a product is given as: Q P= 300- 2000 (i) Determine the price elasticity of demand at P = ? 100 and at P= ?150 (ii) How does the point price elasticity of demand vary with the price? 12. The demand function for a product is given as P= 500 1000 (i) What is the arc elasticity of demand as price increases from {100 to 120? (ii) What is the arc elasticity of demand as price decreases form {120 to ? 100?

11. The relationship between price and quantity demanded for a product is given as: Q P= 300- 2000 (i) Determine the price elasticity of demand at P = ? 100 and at P= ?150 (ii) How does the point price elasticity of demand vary with the price? 12. The demand function for a product is given as P= 500 1000 (i) What is the arc elasticity of demand as price increases from {100 to 120? (ii) What is the arc elasticity of demand as price decreases form {120 to ? 100?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?
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