1
McGill
Faculty of Engineering
MIME 310
Engineering Economy
Tutorials
Chapter 1.
Introduction

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2
McGill
Faculty of Engineering
MIME 310
Engineering Economy
Tutorials
1.1
Consider the demand schedule
shown to the right.
Tangent
Q
i
t
t
Price
Quantity
Demand
0
Graphical Method
Must be origin
Plot the demand curve and approx-
imate the point elasticity at various
points using the graphical method.
Compare these results with the arc
elasticities determined between
adjacent points.
E
D
=
( Q
i
- Q
t
)
Q
t
P
t
P
t
=
( Q
i
- Q
t
)
P
t
P
t
Q
t
=
( Q
i
- Q
t
) / Q
t
P
Q
Point
Price
($/unit)
Quantity demanded
(units/period)
A
7
450
B
6
750
C
5
1250
D
4
2000
E
3
3250
F
2
4750
G
1
8000