Description of Elasticity of demand
Question 1
P 0 1 2 3 4 5 6
Qd 600 500 400 300 200 100 0
A. Graph the data above
b. Calculate the elasticity of demand, using the point formula, as price drops from $6 to 5, then from 5 to 4, 4 to 3, 3 to 2, 2 to 1, and, 1 to 0. Show all work.
C. Calculate the price elasticity of demand, using the mid point formula, for the same price changes as listed in part b. Show all work
C Why are the numbers in part b and part c different?
D Calculate total revenue at each and every price for this demand curve.
E Explain what is happening to the total revenue at each price and why. As prices drop what happens to TR? As prices increase what happens to TR? How do the prices, elasticity and TR all seem to fit together?
f. Which prices are elastic? Inelastic? Unitary Elastic? Explain your answer.