Self-Check Questions
From the data in Table about demand for smart phones, calculate the price elasticity of demand from: point B to point C, point D to point E, and point G to point H. Classify the elasticity at each point as elastic, inelastic, or unit elastic.
Points | P | Q |
---|---|---|
A | 60 | 3,000 |
B | 70 | 2,800 |
C | 80 | 2,600 |
D | 90 | 2,400 |
E | 100 | 2,200 |
F | 110 | 2,000 |
G | 120 | 1,800 |
H | 130 | 1,600 |
Hint:
From point B to point C, price rises from $70 to $80, and Qd decreases from 2,800 to 2,600. So:
The demand curve is inelastic in this area; that is, its elasticity value is less than one.
Answer from Point D to point E:
The demand curve is inelastic in this area; that is, its elasticity value is less than one.
Answer from Point G to point H:
The demand curve is elastic in this interval.
From the data in Table about supply of alarm clocks, calculate the price elasticity of supply from: point J to point K, point L to point M, and point N to point P. Classify the elasticity at each point as elastic, inelastic, or unit elastic.
Point | Price | Quantity Supplied |
---|---|---|
J | $8 | 50 |
K | $9 | 70 |
L | $10 | 80 |
M | $11 | 88 |
N | $12 | 95 |
P | $13 | 100 |
Hint:
From point J to point K, price rises from $8 to $9, and quantity rises from 50 to 70. So:
The supply curve is elastic in this area; that is, its elasticity value is greater than one.
From point L to point M, the price rises from $10 to $11, while the Qs rises from 80 to 88:
The supply curve has unitary elasticity in this area.
From point N to point P, the price rises from $12 to $13, and Qs rises from 95 to 100:
The supply curve is inelastic in this region of the supply curve.