Question

2. Us i ng the filled table above,

Answer 1

The price elasticity of demand of the pen will be -0.2.

How to compute the elasticity?

The demand and supply schedule will be:

Price Qd. Qs

$10. 250. 100

$20. 200. 90

$30. 180. 80

The price elasticity of demand from $1 to $2 will be:

= Percentage change in quantity demanded/percentage change in price

Percentage change in quantity demanded will be:

= (200 - 250)/250 × 100

= -20%

Percentage change in price will be:

= (20 - 10)/10 × 100

= 100%

Therefore, the elasticity of demand will be:

= -20/100

= - 0.2

The value gotten illustrates an inelastic demand.

In order to increase the total revenue, the price can be reduced as it will lead to more sales.

Learn more about PED on:

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Complete question:

Choose any product or service. Create the demand and supply schedule.

Calculate just one PED.

Is the demand elastic or inelastic?

What price change would you recommend to increase TR?