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Analysis 1: Calculating And Interpreting Elasticity

Analysis 1: Calculating And Interpreting Elasticity

Submitted by • May 1, 2013 customwritingtips.com

Part I, a): Price elasticity of Demand

Price elasticity of demand = (change in quantity/average of old and new quantities) ÷ (change in price/average of old and new prices)

= [(500-400)/ (500+400)/2] ÷ [(1-1.5)/ (1+1.5)/2)]

= (100/450) ÷ (-0.5/1.25) = (0.22 ÷ -0.4) =-0.8

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Voted by maryvanzy

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