Purchase Solution

Price elasticity of demand when price changes

Not what you're looking for?

Ask Custom Question

If the demand for soda in a vending machine is represented by the equation Qd=120-40P, what is the price elasticity of demand if the price changes from 1.1 to 2.3? (Hint: you will first need to find the quantity purchased at the two different prices.)

Purchase this Solution
Solution Summary

This solution shows the calculation of price elasticity of soda sold in a vending machine, when price changes. The quantity demanded is given as an equation Qd = 120-40P.

Solution Preview

Dear Student:

Step 1. First, solve the quantity demanded at each price using the equation Qd = 120 - 40P, where P=price.
Qd(1) = 120 - 40*(1.1) = 76
Qd(2) = 120 - 40*(2.3) = 28
Thus, an increase in the price decreases the quantity demanded. It ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

View More Free Quizzes
Related BrainMass Solutions

  • Brands and Price Elasticity

    < 1 then Demand is Price Inelastic;the demand is not sensitive to price changes. (+) Keep in mind when looking at price elasticity.

  • price elasticity of demand

    When the quantity demanded is unresponsive to price changes, the elasticity of demand is zero and when all firms are price takers and all quantity is sold at one price, the price elasticity of demand is infinity.

  • A Firm's Elasticity of Demand During Last 10-15 Years

    A very high price elasticity suggests that when the price of a good goes up, consumers will buy a great deal less of it and when the price of that good goes down, consumers will buy a great deal more.

  • price elasticity of demand .

    410455 Price Elasticity of Demand . Please explain the concept of " price elasticity of demand " ?

  • Price Elasticity and Elasticity of Demand

    In the case of used car price elasticity of demand which is 3, this means that the demand is price elastic. It is sensitive to price changes.

  • Microeconomics

    Price elasticity of demand (ped) measures how responsive the consumers are to price changes, in percent terms.

  • Economics in a Global Environment

    A very high price elasticity suggests that when the price of a good goes up, consumers will buy a great deal less of it and when the price of that good goes down, consumers will buy a great deal more.

  • supply, demand, and price

    Thus it is a measure of relative changes. Often, it is useful to know how the quantity supplied or demanded will change when the price changes. This is known as the price elasticity of demand and the price elasticity of supply.

  • How would the following changes in price affect revenue?

    Price falls and demand is of unit elasticity.

  • Effect on market equilibrium

    If a product's demand function is: Q=30-3p, then calculate the price elasticity of demand when: a. product price is $3 using the point elasticity formula. Elasticity is the change in price divided by the change in the price of a good.

View More Related Solutions