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Unformatted text preview: Chapter 6 Exercises 1.5) Suppose the following the table gives data on the price of rye and the number of bushels of rye sold in 2009 and 2010. Year Price(Dollars per bushel) Quantity (Bushels) 2009 $3.00 8 million 2010 $2.00 12 million a. Calculate the change in the quantity of rye demanded divided by the change in the price of rye. Measure the quantity of rye in bushels . 12,000,000 8,000,000/2.00-3.00 = -4,000,000 b. Calculate the change in the quantity of rye demanded divided by the change in the price of rye, but this time measure the quantity of rye in millions of bushels. Compare your answer to the one you computed in a. 12-8/2.00-3.00 =-4 *Much smaller than a. c. Assuming that the demand curve for rye did not shift between 2009 and 2020, use the information in the table to calculate the price elasticity of demand for rye. Use the midpoint formula in your calculation. Compare the value fir the price elasticity of demand to the values you calculated in a and b. 12,000,000-8,000,000/10,000,000 x 100 = 40% Percentage change in price: 2.00-3.00/2.50x100 =-40% Price elasticity of demand: 40%/-40%=-1 *Way smaller than a and little bit larger than b.*Way smaller than a and little bit larger than b....
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This note was uploaded on 08/09/2011 for the course ECONOMICS --- taught by Professor --- during the Spring '11 term at Universidad Iberoamericana.
- Spring '11