Price elasticity of demand?

Question

Can someone explain how the formula works and give an example... like if the price is going from 12-14 and quantity demanded from 8-6... or use your own examples...

Well the exact question was: Calculate the price elasticity of all three price changes...
where price goes from 12 to 14 to 16 to 18 and then quanity demand goes from 8 to 6 to 4 to 2

Answer 1

Price Electricity of Demand is the responsiveness in quantity demanded to a change in price.

It is defined as:

(the percentage change in quantity demanded) /
(the percentage change in price)

the change in quantity demanded = 12 to 14 = +2 (positive number means an increase in demand)
therefore the percentage change in quantity demanded
= (+2/12)*100
= 50/3

and

the change in price = 8 - 6 = -2 (negative number means a fall in price)
therefore the percentage change in price
= (-2/8)*100
= -25

now to get the elasticity of demand (Ed) you divide the first answer by the second:
Ed = (50/3) / -25
Ed = -2/3 (or -0.67)
which means that the demand is inelastic

Answer 2

usually its a graph, not formula. demand versus price.
higher price, less demand.
lower price, higher demand. (99.9% of the time)

what's the question?

haven't taken economics in 10 years.