Section 9 – Module 46 – Calculating Elasticity

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Presentation transcript:

Section 9 – Module 46 – Calculating Elasticity Mr. Weiss Section 9 – Module 46 – Calculating Elasticity Twins Beth and Cara share a love for books on economics, but each twin has her own set of preferences. Below is the demand schedule for the twins, which indicates the quantity of books Beth and Cara would be willing to purchase at various prices. Price Beth's Quantity Cara's Quantity $1 100 2 90 95 3 80 4 70 85 5 60 6 50 75 7 40 8 30 65 9 20

Section 9 – Module 46 – Calculating Elasticity Mr. Weiss Section 9 – Module 46 – Calculating Elasticity Twins Beth and Cara share a love for books on economics, but each twin has her own set of preferences. Below is the demand schedule for the twins, which indicates the quantity of books Beth and Cara would be willing to purchase at various prices. 1. Draw a graph and label the demand curve for Beth. 2. Draw the demand curve for Cara. Price Beth's Quantity Cara's Quantity $1 100 2 90 95 3 80 4 70 85 5 60 6 50 75 7 40 8 30 65 9 20

Section 9 – Module 46 – Calculating Elasticity Mr. Weiss Section 9 – Module 46 – Calculating Elasticity Twins Beth and Cara share a love for books on economics, but each twin has her own set of preferences. Below is the demand schedule for the twins, which indicates the quantity of books Beth and Cara would be willing to purchase at various prices. The midpoint, or arc, formula is: new Q - old Q average Q new P - old P average P 3. Using the midpoint (or arc) formula, calculate the price elasticity of demand for Beth in the $1 to $3 price range. Price Beth's Quantity Cara's Quantity $1 100 2 90 95 3 80 4 70 85 5 60 6 50 75 7 40 8 30 65 9 20

Section 9 – Module 46 – Calculating Elasticity Mr. Weiss Section 9 – Module 46 – Calculating Elasticity Twins Beth and Cara share a love for books on economics, but each twin has her own set of preferences. Below is the demand schedule for the twins, which indicates the quantity of books Beth and Cara would be willing to purchase at various prices. The midpoint, or arc, formula is: new Q - old Q average Q new P - old P average P 4. Using the midpoint (or arc) formula, calculate the price elasticity of demand for Cara in the $1 to $3 price range. Price Beth's Quantity Cara's Quantity $1 100 2 90 95 3 80 4 70 85 5 60 6 50 75 7 40 8 30 65 9 20

Section 9 – Module 46 – Calculating Elasticity Mr. Weiss Section 9 – Module 46 – Calculating Elasticity

Section 9 – Module 46 – Calculating Elasticity Mr. Weiss Section 9 – Module 46 – Calculating Elasticity