3. Using the midpoint formula, calculate elasticity for each of the following changes in demand by a household.
(see attached file for data).

4. A sporting goods store has estimated the demand curve for a popular brand of running shoes as a function of price. Use the diagram (see attached) to answer the questions that follow.
a. Calculate demand elasticity using the midpoint formula between points A and B, between points C and D, and between points E and F.
b. If the store currently charges a price of $50, then increases that price to $60, what happens to total revenue from show sales (calculate P X Q before and after the price change)? Repeat the exercise for initial prices being decreased to $40 and $20, respectively.
c. Explain why the answers to a. can be used to predict the answers to b.

Ed = ((P1 + P2)/(Q1 + Q2)) x ((Q2 - Q1)/(P2 - P1))

Applying this formula to the given data:

a)
Ed = ((0.25 + 0.15)/(300 + 400)) x ((400 - 300)/(0.15 - 0.25))
Ed = (0.40/700) x (100/-0.10)
Ed = -0.57

Similarly:

b) Ed = -0.65
c) Ed = -0.69
d) Ed = -1

4. ...

Solution Summary

This solution shows how to use the midpoint formula to calculate price elasticity of demand. It goes on to calculate changes in a shoe store's total revenue (TR) when it changes its price, and explain how to predict the direction of change of TR when the store's elasticity at that price is known.

If I were a painter and the price of my paint increased per galloon from $3.00 per galoon to $3.50 a galoon this causes my paint to drop from 35 galoons a month to 20 galoons a month. compute the priceelasticity of demand for paint and show calculations., decide whether the demand is elastic, unitary elastic or inelastic, then

The marketing team for a restaurant wants to determine the priceelasticity of demand coefficient for its steak dinner.
It priced its dinner at different price points in local restaurants to see how many would be sold at different prices. The following is the result of the price trials:
Price Quantity
$5 15000
$8 1

Where Q=number of lunches served and P=price n cents. Compute the point elasticity of demand for school lunches at a price of 40 cents per lunch.
a = -1.78
b= -.078
c = -262.7
d = 1.78

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 priceelasticity of demand for paint and show your calculations.
2.Decide whether the demand for p

Demand for a managerial economics text is given by Q=20,000-300P. The book is initially priced at $30.00.
a. Compute the point priceelasticity of demand at P=$30
b. If the objective is to increase total revenue, should the price be increased or decreased? Explain.
c. Compute the arc priceelasticity for a price decrease fr

Studies indicate that the priceelasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 20%, by how much should it increase the price? What is the new price? Use the midpoint method in your calculations.

Suppose the price of apples rises from $3 a pound to $3.50 and your consumption of apples drops from 35 pounds of apples a month to 20 pounds of apples. Calculate your priceelasticity of demand of apples. What can you say about your priceelasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic? Be sure to s

Suppose the price of apples rises from $3 a pound to $3.45 and your consumption of apples drops from 30 pounds of apples a month to 21 pounds of apples. Calculate your priceelasticity of demand of apples. What can you say about your priceelasticity of demand of apples? Is it elastic, inelastic, or unitary elastic?

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:
Compute the priceelasticity of demand for paint and show your calculations.
Decide whether the demand for paint is ela

Quantity PriceElasticityDemanded
100 $ 5
80 $10
60 $15
40 $20
20 $25
10 $30
1. Determine the priceelasticity of demand at each quantity demanded using the formula % chg in QD divided by % chg in price.
2. Redo #1 usingprice changes of $