Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a month. Perform the following:
- Compute the price elasticity of demand for paint and show your calculations.
- Decide whether the demand for paint is elastic, unitary elastic, or inelastic.
- Explain your reasoning and interpret your results.