Supply and Demand and Percentage Change

Topics: Supply and demand, Elasticity, Price elasticity of demand Pages: 2 (312 words) Published: December 17, 2013
4.2 Worksheet – Calculating Elasticity of demand

1. Otten Industries sells notebook computers for $800 a computer. Mrs. Otten, owner, decides to decrease the price of these computers to $750. As a result, the quantity demanded for notebook computers rose from 500 to 550. a. Calculate the percentage change in price ___________________ b. Calculate the percentage change in quantity demanded ____________ c. Calculate the elasticity of demand _______________________ d. Is it elastic, inelastic, or unit elastic? ____________________ e. Why might computers have this type of elasticity of demand? _________________________________________________________

2. Flu vaccinations cost $19 per shot. If the industry decided to sell them for $20 a shot what do you think would happen to the elasticity of demand?

3. Andes Central Sports, Inc. sells sports equipment. They decided to have a sale and reduce the price of their Nike shoes from $75 per pair to $50 per pair. As a result, the quantity demand rose from 100 shoes to 150 shoes. a. Calculate the percentage change in price ___________________ b. Calculate the percentage change in quantity demanded ____________ c. Calculate the elasticity of demand _______________________ d. Is it elastic, inelastic, or unit elastic? ____________________ e. Why might shoes have this type of elasticity of demand?

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4. The price of gas rose from $2.15 per gallon to $2.27 per gallon. As a result, quantity demand went from 500 gallons per week to 495 gallons per week. a. Calculate the percentage change in price ___________________ b. Calculate the percentage change in quantity demanded ____________ c. Calculate the elasticity of demand _______________________ d. Is it elastic, inelastic, or unit elastic? ____________________ e. Why might gas have this type of elasticity of demand?

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