Microeconomics · free preview
Price Elasticity of Demand
Elasticity measures how strongly quantity responds to price in percentage terms, and its size, from perfectly inelastic to perfectly elastic, sorts markets by how much a price change moves buyers.
1. Percentages, not slopes
Percentages, not slopes
2. The vocabulary of size
The vocabulary of size
3. What makes demand elastic
What makes demand elastic
4. A first computation
A first computation
5. Classifying the response
A metro authority raises fares by 8 percent and ridership falls by 2 percent over the following year. What is the price elasticity of demand, and how is this demand best described?
6. Which demand is more elastic
Rank these three demands from most to least price elastic, the demand for Coca-Cola, the demand for cola soft drinks in general, and the demand for all beverages.
7. Compute the elasticity
A rose grower raises the price of a bouquet from 20 to 24 dollars, and weekly sales fall from 100 bouquets to 80. Using the simple percentage method with the original values as the base, compute the price elasticity of demand as a positive number and write the number.
8. Classifying the fare response
A metro authority raises fares by 10 percent and ridership falls by 5 percent. What is the price elasticity of demand, and how is it classified?
9. Which demand bends most
Which of these demands is most likely to be the most price elastic?
10. The elasticity ratio
A price rise of 10 percent cuts quantity demanded by 30 percent. Compute the price elasticity of demand as an absolute value, and write the number.
Practice this interactively
Free account · instant grading · spaced review that schedules itself.
Start this course for free