microeconomic - elasticity?

Question

state the relevant elasticity concept. Then compute the measure of elasticity. Where appropriate, use the average prices and quantities in your calculations. In all cases, assume that these are ceteris paribus changes.(20)

a.When the price Rhubarb is reduced from $14.00 to $11, Rhubarb sales increase from 1200 to 1350

Answer 1

This is the price elasticity of demand. So, % change in quantity demanded/ % change in price is what you are looking for.

To calculate, you must find the percentage changes. Here is quantity calculation: (1350-1200)/1200=12.5%

Price calculation: (11-14)/14= -21.4%.

So, 12.5%/-21.4%= -.58.

-.58 is your price elasticity of demand for rhubarb. Note, many times, economists will drop the negative sign with this particular demand, as it is always negative. As price goes up, less is demanded, and vice versa. In your course, you may want to put that this is the actual elasticity, but that the negative is often omitted.

Unlike the first poster said, who apparently had a sub-standard economics education, you will find that this is generally a fundamental concept taught in principles of economics. It will play a role in micro-economics as well, although it generally is not very pertinent to macro-economics.

Answer 2

You must be taking a socialist economics course that has more to do with politics than economics....good luck

Price Flexibility Downward

..... if you need to do math or use differential calculus, you are studying bogus economics.

Answer 3

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