Economics Elasticity of Demand
Calculate the Elasticity of Demand for the change in price from $60 to $55.
Demand Schedule
Price($)
60
55
50
45
40
Quantity Demanded (in units)
200
220
255
290
360
Given Formula:
Ed=%Change in Quantity Demanded / %Change in Price
The answer is 1.09.
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1 solution
%inQD=△inQD/Q1+Q2/2 x100%
=200-220/200+220/2
=-20/210 x100%
=9.52%
%inP=△inP/P1+P2/2 x100%
=60-55/60+55/2
=5/57.5 x100%
=8.70%
%ED =9.52/8.70 x100%
=1.09%
∴ The ED is unit elastic with 1.09% ($60 to $55)