Elasticity. Was the price change beneficial? P of Cadburys chocolate bars increase from 80 cents to 1 dollar. Quantity demanded decreases from 1,000 bars.

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Presentation transcript:

Elasticity

Was the price change beneficial? P of Cadburys chocolate bars increase from 80 cents to 1 dollar. Quantity demanded decreases from 1,000 bars per month to 950 bars P of Mercedes 200E decreases from 40,000 dollars to 38,000 Quantity demanded increases from 100 cars per month to 120 cars.

Questions In a busy food hall the P of a Pizza decreases from $5 to $4 and QD increases from 350 pizzas per week to 500. Calculate the PED, change in Revenue and display this information in using Graphs and Revenue boxes. Do you think that this company will be able to sustain this change in P in the LR given its competition? Explain your answer.

Questions If Kelloggs increase the P of Cornflakes from $4 to $4.40 and demand decreases from 300 packets to 270 packets a week. Calculate the PED and explain whether you feel the P increase has been worthwhile in the SR and LR. Include graphs in your explanation.

Questions A factory (Benetton) produces 2 products. T-shirts and Socks The price of T-shirts falls from $22 to $20 and QD increases from 40 to 60 units. Whilst the price of socks decrease from $5 to $4 and QD increases from 180 to 200 units. Calculate the PED of both products and explain (including the use of Graphs) why the elasticity of a product changes as P decreases.