# Label demand as elastic, unit elastic, or inelastic for each scenario. Use the midpoint method when applicable to calculatethe price elasticity of demandContain Yourself!, a plastic container company, raises the price of its signatureLunchbox container from \$3.00 to \$4.00. As a result, the quantity sold drops from20,000 to 15,000.Economists working for the United States have determined that the elasticity of demandfor gasoline is 0.5Capital Metro decides to increase bus fare rates from \$2.00 to \$2.21. Consequently, thenumber of passengers who decide to take the bus in Austin drops from an average of70,000 riders a day to an average of 61,000 riders a day.Answer Bankperfectly elasticelasticunit elasticinelasticperfectly inelastic

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Step 1

Price elasticity of demand: It is the degree of responsiveness of change in quantity demanded with respect to change in the price of the good.

It can be calculated with the help of the following formula:

Step 2

The nature of elasticity of demand at various elasticities is shown above:

Step 3

As the plastic company raises the price of signature lunchbox container from \$3.00 to \$4.00, the quantity sold drops down from 20,000 to 15,000 units.

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