Concept explainers
The missing amount.
Explanation of Solution
The given information:
Demand for Ben and Jerry’s ice cream.
% changes in
% changes in quantity = -12%
Demand for beer at San Francisco
% changes in price = -20%
Elasticity = -5
Demand for Broadway theatre tickets in New York
% changes in quantity = -15%
Elasticity = -10
Supply of chicken
% changes in price = 10%
Elasticity = 1.2
Supply of beef cattle
% changes in price = -15%
% changes in quantity = -10%
Calculation:
The general formula to calculate the elasticity is shown below:
Substitute the respective values in Equation (1) to calculate the
Elasticity of demand for Ben and Jerry’s ice cream is -1.2%.
Using Equation (1), % changes in quantity, % change sin price and elasticity is shown below in Table 1:
Table 1
% changes in price | % changes in quantity | Elasticity | |
Demand for Ben and Jerry’s ice cream. | +10% | -12% | (a) 1.2 |
Demand for beer at San Francisco | -20% | (b) +10 | -0.5 |
Demand for Broadway theatre tickets in New York | (c) +15% | -15% | -1.0 |
Supply of chicken | -10% | (d) +12% | +1.2 |
Supply of beef cattle | -15% | -10% | (e) -0.67 |
Elasticity: Elasticity refers to the responsiveness or the change in the quantity demanded due to the change in price.
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