Question

Suppose that at a price of $8, 13,600 units were sold while at a price of $6, 15,200 units were sold. Without calculating the value of price elasticity of demand , can you determine whether demand is elastic, unit elastic, or inelastic between the price of $6 and the price of $8?

Answer 1

Answer:

Inelastic between the price of $6 and the price of $8

Explanation:

At price $8, the total expenditure ;

= price * Quantity

=$8 * 13600

=$108,800

At price $6, the total expenditure;

=$6 * 15200

=$91,200

Since the total expenditure is decreasing with a decrease in price then the elasticity of demand will be inelastic.

Answer 2

Answer:

Inelastic

Explanation:

The elasticity of demand is the response of consumers to a change in the price of a product (Barnier, 2020). It is calculated as the percentage change in the quantity demanded divided by the percentage change in price.  

Looking at the number of units sold at each price ($6 and $8), we can determine that the demand is inelastic. The percentage change in demand is smaller than the percentage change in price.  This means that the demand curve will be steep.