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Week 1 Demand Elasticity

# Week 1 Demand Elasticity - Demand Elasticity By N S Demand...

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Demand Elasticity By N. S Demand Elasticity Chapter 5, problem #4 (page 104-105) Narinder Schoeling Ashford University - Online Campus ECO - 204 Principles of Microeconomics Instructor: Chris Newcomb October 12, 2009

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Demand Elasticity By N. S. 2 Chapter 5, problem #4: A. Calculate demand elasticity using the midpoint formula between points A and B, between points C and D, and between points E and F. A-B= (Q2-Q1)/((Q1+Q2)/2)*100) 66.67 (P2-P1)/((P1+P2)/2)*100) -18.18 quantity demanded / Price -3.67 Since this is greater than -1.1 and larger = elastic demand C-D= (Q2-Q1)/((Q1+Q2)/2)*100) 28.57 (P2-P1)/((P1+P2)/2)*100) -28.57 quantity demanded / Price -1.00 Since this is -1 = unitarily elastic demand E-F= (Q2-Q1)/((Q1+Q2)/2)*100) 18.18 (P2-P1)/((P1+P2)/2)*100) -66.67 quantity demanded / Price -0.27 Since it is between-.01 to -.99 = Inelastic demand
Demand Elasticity By N. S. 3 B. If the store currently charges a price of \$50, then increases that price to \$60, what happens to total revenue from shoe sales (calculate PxQ before and after price change)? Repeat the exercise for initial prices being decreased by \$40 and \$20, respectively.

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