Economics2080.15 marksNumerical: price elasticity of demandPrice elasticity of demand definition and types
Question Consider the following table: | Combinations | A | B | C | D | E | F | G | |---|---|---|---|---|---|---|---| | Price (Rs.) | 6 | 5 | 4 | 3 | 2 | 1 | 0 | | Demand (Units) | 0 | 1000 | 2000 | 3000 | 4000 | 5000 | 6000 | a) Find the price elasticity of demand for movement from points B to D an
Question
Consider the following table:
| Combinations | A | B | C | D | E | F | G |
|---|---|---|---|---|---|---|---|
| Price (Rs.) | 6 | 5 | 4 | 3 | 2 | 1 | 0 |
| Demand (Units) | 0 | 1000 | 2000 | 3000 | 4000 | 5000 | 6000 |
a) Find the price elasticity of demand for movement from points B to D and D to B by proportional method.
b) Compute the price elasticity of demand at the mid way between A to C and C to A by arc method. [5+0]
Combination A B C D E F G ------------------------ Price (Rs.) 6 5 4 3 2 1 0 Demand (Units) 0 1000 2000 3000 4000 5000 6000 Points of interest: - B: $P = 5$, $Q = 1000$ - D: $P = 3$, $Q = 3000$ - A: $P = 6$, $Q = 0$ - C: $P = 4$, $Q = 2000$ --- The proportional method formula: $$Ed = \frac{\Delta...