ECO 204 Week 1 Assignment Demand Elasticity

Apr 16th, 2015
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Demand elasticityPrinciples of MicroeconomicsECO204Price Elasticity of Demand is defined as: PointsShoe Sales per WeekPrice per Pair ($)070A10060B20050C30040D40030E50020F60010a) Calculate demand elasticity using the midpoint formula between points A & B, between points C & D, and between points E & F. 1) Between points A & B:Sales % between A and B200-100=100200+100=3002= 150100150= 0.667Price % between A and B50-60=-1050+60=1102=55-1055=-0.1818Answer: 0.667-0.1818= -3.72) Between points C & D:Sales % between C and D400-300=100400+300=7002= 350100350= 0.286Price % between C and D30-40=1030+40=702=351035= 0.286Answer: 0.286-0.286= 1.03) Between points E & F:Sales % between E and F600-500=100600+500=11002= 550100550= 0.1818Price % between E and F10-20=-1010+20=302=151015=-0.667Answer: 0.1818-0.667= 0.27b) If the store currently charges a price of $50, then increase that price to $60, what happens to total revenue from shoe sales. Repeat the exercise for initial prices decreasing to $40 and $20 respectively. If the store increases the price from 50 to 60, total r

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