iHomework: Homework 4 Score: 0 of 2 pts HW Score: 33.33%, 10 of 30 pts Question
ID: 1162342 • Letter: I
Question
iHomework: Homework 4 Score: 0 of 2 pts HW Score: 33.33%, 10 of 30 pts Question Help Concept: Compute Price Elasticity Consider the market for a new DVD movie, where the price is initially $12 and 36 copies are sold per day at a superstore, as indicated in the figure to the right The superstore is considering lowering the price to $8 What is the price elasticity of demand between these two prices (use the Midpoint Formula)? The price elasticity of demand is rounded to two decimal places) (Enter your response as a real number B. 1216 20 2428 32 38 40 444 $2 55 6 Quantity (copies per day) Enter your answer in the answer box and then click Check Answer All parts showing Clear AllExplanation / Answer
Answer : P 1 = $12
P 2 = $8
Q 1 = 36
Q 2 = 44
E d = ( Q 2 - Q 1)/ ( Q 1 + Q 2)/2/ ( P 2 - P 1)/ (P 2 + P 1)/2
E d = (44-36)/(44+36)/2/(8-12)/(8+12)/2( Using mid point)
E d = -0.5
The price elasticity of demand is -0.5. Negative sign indicated inverse relationship exist between them.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.