Suppose that during the past year, the price of a laptop computer fell from $2,500 to $2,300. During the same time period, consumer sales increased from 403,000 to 549,000 laptops. Calculate the price elasticity of demand between these two price-quantity combinations by using the following steps. After each step, complete the relevant part of the table with the appropriate answers. Quantity Demanded Price Absolute Change $ Average $ Percentage Change (in decimals) Step 1: Calculate the absolute change in the quantity demanded. Do the same for the absolute change in price. Step 2: Calculate the average quantity by adding the original quantity and the new quantity and then dividing by 2. Do the same for the average price. Step 3: Calculate the percentage change, expressed as decimals, in quantity demanded by dividing the absolute change in quantity demanded by the average quantity. Do the same to calculate the percentage change in price. Step 4: Calculate the price elasticity of demand by dividing the percentage change in quantity demanded by the percentage change in price. Using the midpoint method, the price elasticity of demand for laptops is about
Suppose that during the past year, the price of a laptop computer fell from $2,500 to $2,300. During the same time period, consumer sales increased from 403,000 to 549,000 laptops. Calculate the price elasticity of demand between these two price-quantity combinations by using the following steps. After each step, complete the relevant part of the table with the appropriate answers. Quantity Demanded Price Absolute Change $ Average $ Percentage Change (in decimals) Step 1: Calculate the absolute change in the quantity demanded. Do the same for the absolute change in price. Step 2: Calculate the average quantity by adding the original quantity and the new quantity and then dividing by 2. Do the same for the average price. Step 3: Calculate the percentage change, expressed as decimals, in quantity demanded by dividing the absolute change in quantity demanded by the average quantity. Do the same to calculate the percentage change in price. Step 4: Calculate the price elasticity of demand by dividing the percentage change in quantity demanded by the percentage change in price. Using the midpoint method, the price elasticity of demand for laptops is about
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 4.9P: (Other Elasticity Measures) Complete each of the following sentences: a. The income elasticity of...
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Transcribed Image Text:Suppose that during the past year, the price of a laptop computer fell from $2,500 to $2,300.
During the same time period, consumer sales increased from 403,000 to 549,000 laptops.
Calculate the price elasticity of demand between these two price-quantity combinations by using
the following steps. After each step, complete the relevant part of the table with the appropriate
answers.
Quantity Demanded
Price
Absolute Change
$
Average
$
Percentage Change
(in decimals)
Step 1: Calculate the absolute change in the quantity demanded. Do the same for the absolute
change in price.
Step 2: Calculate the average quantity by adding the original quantity and the new quantity and
then dividing by 2. Do the same for the average price.
Step 3: Calculate the percentage change, expressed as decimals, in quantity demanded by dividing
the absolute change in quantity demanded by the average quantity. Do the same to calculate the
percentage change in price.
Step 4: Calculate the price elasticity of demand by dividing the percentage change in quantity
demanded by the percentage change in price.
Using the midpoint method, the price elasticity of demand for laptops is about
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