1). Assume that when the price of CDs increase from $20 to $22, the quantity of
ID: 1141694 • Letter: 1
Question
1). Assume that when the price of CDs increase from $20 to $22, the quantity of CDs decreased from 100 to 87. What is the price elasticity of demand for CDs? Based on y answer, is the demand for CDs elastic, inelastic, or unitary elastic. 20-3 inelastic 2) Assume that when the price of Good X rises from $15 to $30, the quantry deman X falls from 100 to 80. What is the price elasticity of demand for Good X? Based on answer, is the demand for Good X elastic, inelastic, or unitary elastic? 100 0 s-30 Elastic 3) Assume that when the price of Good Y increases fromstttf tequantity d Good Y falls from 88 to 80. What is the price elasticity of demand for Good Y? Ba answer, is the demand for Good Y elastic, inelastic, or unitary elastic? 88-to .09010 88-780 0 4) Briefly describe the difference between a change i demand. versus a chang in tn n quantrty daminded isamount wated whien in price chonyg in dumand is sonathay casd by 5) Briefly describe the difference between a change in quantity supplied versus a supply. n gntity sPled chane in anront suppied n lina . Change in Supply is aping tu ca tue ent lett orExplanation / Answer
Question-1: price elasticity of demand = % Change in quantity demaned / % change in price
Where, % change in quantity demaned =( new demand - old demand/old demand)*100. % Change in price = (new price - old price/ old price)*100.
= [(87-100/100)*100]/[(22-20/20)*100]
= 13%/10%
=1.3
So price elasticity of demand equal to 1.3 Now to know what kind of elasticity , let's know different elasticities.
If elasticity of demand = 1, then it is unitary elasticity. If elasticity of demand =0 , then it is perfectly in elastic.
If elasticity of demand >1, then it is elastic. If elasticity of demand<1, then it is inelastic. Since here it is 1.3(>1) , we take it as elastic demand.
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