Calculate the numerical elasticity of short-run demand


The following table gives some data on the demand for long distance telephone calls:

QTY (millions of minutes per day)

Price (cents per minute): SHORT RUN LONG RUN

10 700 1000

20 500 500

30 300 0

If the price rises from $.20 to $.30:

A. Graph the relationship.

B. Calculate the numerical elasticity of short-run demand. Is it unitary, elastic, inelastic, etc.?

C. Calculate the numerical elasticity of long-run demand. Is it unitary, elastic, inelastic, etc.?

D. Is the demand for calls more elastic in the short-run or long run?

E. Why would consumers demand 0 minutes in the long run if the price was $.30 per minute?

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Microeconomics: Calculate the numerical elasticity of short-run demand
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