Details: Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a month. Perform the following:
1.Compute the price elasticity of demand for paint and show your calculations.
2.Decide whether the demand for paint is elastic, unitary elastic, or inelastic.
1. Price elasticity of demand is the ratio of the change in demand to the change in price. You calculate it by dividing the % change in quantity demanded by the % change in ...
Sample calculation of the price elasticity of demand for paint given the changes in price and quantity demanded.