Answer:
a. inelastic
increases
b. inelastic
increases
c. elastic
decreases
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes. An increase in price would lead to decrease in total revenue
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one. An increase in price would increase total revenue
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases
Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.
Elasticity when price increases from $10 to $20 : -0.143 / 1 = -0.143
Percentage change in quantity demanded = (300 / 350) - 1 = -0.143
Percentage change in price = (20 /10) - 1 = 1
Demand is inelastic
Elasticity when price increases from $30 to $40 : -0.2 / 0.33 = 0.6
Percentage change in quantity demanded = (200 / 250) - 1 = -0.2
Percentage change in price = (40 /30) - 1 = 0.33
Demand is inelastic
Elasticity when price increases from $50 to $60 : -0.33 / 0.2 = 1.65
Percentage change in quantity demanded = (100 / 150) - 1 = -0.33
Percentage change in price = (60 /50) - 1 = 0.2
Demand is elastic
