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    Calculating Price elasticity of demand and inflation rate

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    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.

    Q1=32 Q2=22
    P1=37 ...

    Solution Summary

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