Plot the price and quantity data given in the dcmand schedule of exercise 1. Put price on the...

Question

Plot the price and quantity data given in the dcmand schedule of exercise 1. Put price on the ver-tical axis and quantity on the horizontal axis. Indi-cate the price elasticity value at each quantity /demanded. Explain why the elasticity value gets cu smaller as you move down the demand curve. 3. What would a 10 percent increase in the price of movie tickets mean for the quantity demanded of a movie theater if the price elasticity of demand was 0.1, 0.5, 1.0, and 5.0? 1/4. Using the demand curve plotted in exercise 1, illus-trate what would occur if the income elasticity of dcmand was 0.05 and income rose by 10 percent. If the income elasticity of demand was 3.0 and income rose by 10 percent, what would occur? 5. Pick a good whose demand is price elastic. list five substitutes and five complements. Which is easier to come up with the list of substitutes or the list of complements? Explain.

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Robert · Accepted Answer

Economics Assignment
 

Chapter 19 
Question 1 
a)  price elasticity of demand = (percentage change in quantity demanded) / (percentage 
change in price) 
Percentage change in quantity demanded = (QB - QA) / [(QA + QB)/2] 
Percentage change in price = (PB - PA) / [(PA + PB)/2] 
Quantity 
Demanded 
Price % change 
in 
quantity 
demanded 
% 
change 
in price 
Elasticity 
100 5 -0.22 0.67 -0.33 
80 10 -0.29 0.40 -0.71 
60 15 -0.40 0.29 -1.40 
40 20 -0.67 0.22 -3.00 
20 25 -0.67 0.18 -3.67 
10 30 -2.00 -2.00 1.00
b) If price change is of $10 instead of $5 
Quantity 
Demanded 
Price % change 
in 
quantity 
demanded 
% 
change 
in price 
Elasticity 
100 5 -0.22 1.00 -0.22 
80 15 -0.29 0.50 -0.57 
60 25 -0.40 0.33 -1.20 
40 35 -0.67 0.25 -2.67 
20 45 -0.67 0.20 -3.33 
10 55 -2.00 -2.00 1.00
Question 2
-4.00
-3.00
-2.00
-1.00
0.00
1.00
2.00
0
10
20
30
40
50
60
0 50 100 150
P
ri
ce
 
Quantity 
Price
Elasticity
As the individual moves down on the demand curve, the price decreases and becomes smaller 
as each dollar change represents a larger percentage change in price which is divided by a 
smaller percentage change in the quantity per unit.

Plot the price and quantity data given in the dcmand schedule of exercise 1. Put price on the ver-tical axis and quantity on the horizontal axis. Indi-cate the price elasticity value at each quantity...

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