ch4_elasticity

ch4_elasticity - ECN 221 In class work - CH 4 The...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECN 221 In class work -- CH 4 “The Elasticity of Supply and Demand”. This is not due for a grade. PRICE ELASTICITY OF DEMAND is the percentage change in the quantity of a good demanded for a one percent change in the good's own price. That is, price elasticity of demand tells us by how much quantity demanded of a particular good will change for a given price change. p d d E = % Q %P a. What is the sign of price elasticity of demand? Why? b. Between 1994 and 1995 the price of all gasoline went up by 1%, and the quantity of gasoline demanded fell by 0.5%. What is the price elasticity of demand for gasoline? Is this demand "elastic" or "inelastic"? c. Between 1994 and 1995 the price of 89 octane gasoline at the Texaco station on Forest Avenue in Richmond went up by 1%, and the quantity demanded of that particular gasoline fell by 10%. What is the price elasticity of demand for this type of gasoline? Is this demand "elastic" or "inelastic"?
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

ch4_elasticity - ECN 221 In class work - CH 4 The...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online