Homework: Homework 4 Score: 0 of 2 pts End of Chapter 3.12 HW Score: 58.33%, 17.
ID: 2440063 • Letter: H
Question
Homework: Homework 4 Score: 0 of 2 pts End of Chapter 3.12 HW Score: 58.33%, 17.5 of 30 pts Question Help * The Delaware River Joint Toll Bridge Commission increased the toll on the bridges on Route 22 and Interstate 78 from New Jersey to Pennsylvania from S0 60 to $1.10, Use the information in the table below to answer the questions (assume nothing other than the toll change occurred during the months that would affect customer demand) NUMBER OF VEHICLES CROSSING THE BRIDGE 503 470 11938 Toll 14.943 641 246 November $1.10 Using the midpoint formula, for the Route 22 Bridge, the price elasity of demand is H034 the minus sign.) Be sure to include the minus sign.)Explanation / Answer
Ans,
To calculate price elasticity of demand by mid point method we use following formula
We know that price elasticity of demand = percentage change in quantity / percentage change in price
My midpoint method ,
percentage change in quantity = Q2 - Q1 / (Q2 + Q1) /2 * 100
percentage change in price = P2 - P1 / (P2+P1)/2 * 100
A) price elasticity of demand for round 22 bridges will be
Percentage change in quantity = 411.938 - 503.470 / ( 411.938 +503.470)/2 *100
percentage change in quantity = - 91.532 / 457.704 * 100 = - 19.998
percentage change in price = 1.10 - 0.60 / ( 1.10+0.60)/2 * 100
Percentage change in price = 0.5 / 0.85 * 100 = 58.823
Thus price elasticity of demand = - 19.998 / 58.823 = -0.34
B) Price elasticity of demand for inter state 78 bridges
Percentage change in quantity = 641.246 - 714.943 / (641.246+714.943)/2 * 100
Percentage chnage in quantity = - 73.697 / 678.094 * 100 = - 10.868
Percentage change in price will be same as calculated in part A i.e 0.5/0.85 *100 = 58.823
thus percentage change in demnad for 78 bridges = -10.868 / 58.823 = -0.18
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