BU224_02_Carr_Marsha_Unit 5

# BU224_02_Carr_Marsha_Unit 5 - Unit 5 AB224 | Microeconomics...

This preview shows pages 1–3. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Unit 5 AB224 | Microeconomics Questions 1. The accompanying table shows the price and monthly demand for barrels of gosum berries in Gondwanaland. Price of gosum berries per barrel Native Demand for gosum berries per month \$100 0 \$90 100 \$80 200 \$70 300 \$60 400 \$50 500 \$40 600 \$30 700 \$20 800 \$10 900 \$0 1000 a. Using the midpoint method (show your work), calculate the price elasticity of demand when the price of barrel of gosum berries rises from \$10 to \$20. What does this estimate imply about the price elasticity of demand of gosum berries? (800 – 900) ÷ (900 + 800)/2 ÷ (20 – 10) ÷ (10 + 20)/2 -100 ÷ (1700 / 2) ÷ (10 ÷ (30 / 2) (-100 ÷ 850) ÷ (10 ÷ 15) -0.1176 ÷ 0.6667 = 0.1765 Since the price elasticity of demand is less than 1, the price elasticity of demad for the gosum berries is inelastic in this price range. A change in price will cause a smaller change in the amount demanded.
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern