Question

calculate the price elasticity of demand when the price of a barrel of gosum berries rises from $10 to $20. What kind of elasticity is this value that you computed for the price elasticity of demand and what does it mean for how demand will change based on a change in price within this price range

Answer 1

Answer:

PED = -0.176 or 0.176 in absolute terms. It is price inelastic, since PED < 1.

Explanation:

the quantity demanded for a price of $10 is 900 barrels.

the quantity demanded for a price of $20 is 800 barrels.

Using the midpoint method for calculating PED:

PED = {(Q2 - Q1) / [(Q2 + Q1) / 2]} / {(P2 - P1) / [(P2 + P1) / 2]}

PED = {(800 - 900) / [(800 + 900) / 2]} / {($20 - $10) / [($20 + $10) / 2]}

PED = (-100 / 850) / ($10 / $15) = -0.1176 / 0.6667 = -0.176

Price elasticity of demand measures how much does the quantity demanded of a good or service vary as a result form a 1% change in its price.

• PED < 1, price inelastic. A 1% change in price will result in a proportionally smaller change in quantity demanded.
• PED > 1, price elastic. A 1% change in price will result in a proportionally larger change in quantity demanded.
• PED = 1, price unitary. A 1% change in price will result in a proportionally equal  change in quantity demanded.

Answer 2

Answer: 0.0784

Explanation: had to seem up the whole question online.

Price of gosum berries per barrel

$100 - 0

$90 - 100

$80 - 200

$70 - 300

$60 - 400

$50 - 500

$40 - 600

$30 - 700

$20 - 800

$10 - 900

$0 - 1000

Midpoint method formula ( elasticity)

Price at $10=900 be (a)

Price at $20=800 be ( b)

Price (a¹) =$10

Price ( b¹) =$20

(b-a) / (b+a) /2) × (b¹-a¹) / (b¹+a¹)/2

= (800-900) / (800+900) /2 × (20-10) / (20+10)/2

= ( 100 ) / ( 850 ) × (10) / ( 15 )

= 0.11765 × 0.6666

= 0.0784

The elasticity noticed from the calculated value which is = 0.0748 it's a wonderfully inelastic demand. Where a change within the price has no effect on the amount of the products demanded. elasticity of demand = 0