PROBLEM: ELASTICITY OF DEMAND [Ed]
1. Question: Why does a business need to understand elasticity of demand?
2. The schedule below is for Beer
Price Quantity Demand
$3 3
6 24
8 16
12 14
Calculate the elasticity of demand between prices $6 to $8
SHOW ALL WORK
3. State if the Ed is elastic, inelastic, or unit elastic based upon your calculations.
4. If price were lowered (given the elasticity of demand) what would happen
to total revenues? GIVE AN EXPLANATION
5. If research proved that malt in beer prolonged life would consumers change their consumption of beer? Explain your answer
6. Draw the demand curve and then indicate on the graph this change
State whether this is a “Change in Demand or a Change in Quantity Demanded”[(hint) Do you move along the curve or construct a new demand curve [2]Note: If you cannot send the graph then draw the graph with the changes and then explain the changes clearly and concisely.