ANSWER THE FOLLOWING AND BASE ON THE FORMULA GIVEN IN THE IMAGE 1. Trek Inc., which sells bikes, changed the price of their foldable bikes from P3,000 to P3,500. As aresult, the quantity of their product sold went from 700 bikes to 500 bikes. Compute for the priceelasticity of demand. Indicate whether the product’s demand is elastic or inelastic.2. Miko is a collector of matchbox cars. He used to buy five (5) cars every payday. However, whenhis income was raised from P17,000 to P20,000, he started to buy 10 cars. What is the incomeelasticity of demand? Income Elasticity of DemandPercentage change in quantity demandedEpPercentage change in incomeQ2 - Q1% Change in quantity =x 10(Q2 + Q1)/2Iz - l1x 100(I2 + 11)/2% Change in income =Where:Q2 = Current quantityQi= Previous quantityIz = Current income1= Previous income Price elasticity of demandPercentage change in quantity demandedEp :Percentage change in priceQ2 - Q1x 100(Q2 + Q1)/2% Change in quantityР. — Р.% Change in price =(P2 +x 100+ P1)/2Where:Q2 = Current quantityQ1= Previous quantityP2 = Current priceP,= Previous price

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Answered: ANSWER THE FOLLOWING AND BASE ON THE…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 2E: The price elasticity of demand for personal computers is estimated to be 2.2. If the price of...

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ANSWER THE FOLLOWING AND BASE ON THE FORMULA GIVEN IN THE IMAGE

1. Trek Inc., which sells bikes, changed the price of their foldable bikes from P3,000 to P3,500. As a
result, the quantity of their product sold went from 700 bikes to 500 bikes. Compute for the price
elasticity of demand. Indicate whether the product’s demand is elastic or inelastic.

2. Miko is a collector of matchbox cars. He used to buy five (5) cars every payday. However, when
his income was raised from P17,000 to P20,000, he started to buy 10 cars. What is the income
elasticity of demand?