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Ch.5 Elasticity and Its Application

Ch.5 Elasticity and Its Application - Ch 5 Elasticity And...

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Ch. 5 Elasticity And Its Application Elasticity of Demand Step 1: Find % Change in QD Step 2: Find % Change in P Step 3: Combine 1 & 2
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A. If a company wants to raise its revenues, the income it receives from the sale of Goods/Services, should the company increase or decrease its price? B. Consider these 2 scenarios and tell me what you think will happen to my Quantity demanded 1) I am a diabetic. I need 1 injection of insulin a day (7 per week). Each injection costs me $10. What happens to my Quantity demanded when the price doubles to $20? 2) I like pizza, I buy my pizza online. I generally buy a cheese pizza from Papa Johns for $10, but when today when I go online it costs $20. C. If the price of oil goes up – how does this affect you personally? (trick question) Price Elasticity of Demand : A measure of the responsiveness of the Quantity Demanded of a Good / Service to a change in its price when all other influences on buyer’s plans remain the same
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I: What Determines Elasticity of Demand?
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