# Calculating Price elasticity of demand and inflation rate

Consider the following data

Price of Elasticity Data

P Q

37 32

47 22

Inflation Data

Year CPI GDP

2005 100 345

2006 126 349

2007 136 424

2008 146 526

a) Compute the price elasticity of demand

b) Compute the inflation in 2008 relative to the price of 2007.

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#### Solution Preview

Please refer attached file for complete solution. Formulas typed with the help of equation writer are missing here.

Solution:

Q1=32 Q2=22

P1=37 ...

#### Solution Summary

The solution describes the steps for calculating price elasticity of demand and rate of inflation.

$2.19