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Price Elasticity of Demand: Graph and Analysis

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The following is a demand schedule for shoes:
Price: $100 ; $80 ; $60 ; $40 ; $20
Quantity: 10 ; 14 ; 18 ; 22 ; 26

A) Illustrate the demand curve.
B) How much will consumers spend on shoes at a price of $80?
C) As price drops from $100 to $80, is the demand elastic or inelastic? Show your work or reasoning.

Advertisers convince people that to be stylish they need twice as many shoes.
D) Redraw the demand curve.
E)How much will consumers now spend on shoes at a price of $80?
F) As price drops from $100 to $80, how does elasticity change as opposed to problem 1? Why?

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Solution Preview

A) See the attached file. The Demand curve is D1.
B) At a price of $80 consumers will demand 14 shoes, so they will spend a total of $1120.
C) Ed = (% change in Q)/(% ...

Solution Summary

Given a demand schedule for shoes, this solution shows how to graph the Demand curve and calculate the price elasticity of demand for shoes over a given range.