Purchase Solution

Economics in a Global Environment

Not what you're looking for?

Ask Custom Question

Details: Suppose the price of apples rises from $3.50 a pound to $4.00 and your consumption of apples drops from 30 pounds of apples a month to 20 pounds of apples. Calculate your price elasticity of demand of apples. What can you say about your price elasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic? Be sure to show the work you used to support your answer.

Calculate the elasticity of demand and explain the meaning of the calculation. State the factors that determine the factors that generate the elasticity of demand.Note that the elasticity is a ratio of two percent changes: one for price and one for quantity demanded. As you examine your answer, note that elasticity of demand is the ratio of TWO SEPARATE percent changes.

Purchase this Solution
Solution Summary

Suppose the price of apples rises from $3.50 a pound to $4.00 and your consumption of apples drops from 30 pounds of apples a month to 20 pounds of apples. Calculate your price elasticity of demand of apples. What can you say about your price elasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic? Be sure to show the work you used to support your answer.

Solution Preview

Percentage change in quantity demanded: (30-20)/30= 10/30= .33 or 33.33%

Percentage change in price= (4-3.5)/3.5= .5/3.5= 14.28%

Price Elasticity= 33.33/14.28= 2.33

Thus, the price elasticity of demand of apples is elastic or in other words, a small change in price leads to a change in the demand of apples. It is not unitary elastic because the percentage change in price is not equal to percentage change in ...

Solution provided by:
Sandeep Bardia, MBA
Education
  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
Recent Feedback
  • "Thank you. "
  • "Thank you"
  • "Thank you. I got 20/20 last week for my discussion you help me out with."
  • "Thank you. Great Job. "
  • "Thank you. Great Job. "
Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

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.

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.

View More Free Quizzes
Related BrainMass Solutions

  • Public Policy, Global Sustainability, and Global Economics

    Take a position on public policy, global sustainability, and global economics.

  • antitrust behavior

    150369 Economics in a Global Environment Details: The Microsoft antitrust trial (United States vs. Microsoft) has been one of the biggest investigations of antitrust behavior since the turn of the century.

  • Trends Shaping the Global Market for U.S. Companies

    This solution provides a detailed discussion on the major trends (technology and economics) that are shaping the future of the global market for U.S. companies.

  • Does free trade harm the environment- Argument

    471410 Economics Does free trade harm the environment? Environmentalists argue that trade liberalization harms the environment. The decisions of the World Trade Organization (WTO) in particular have been the subject of much criticism.

  • Organizational Change & Management

    of: e-business management, global leadership, managerial economics, and financial methods play in a management career and professional development?

  • Environmental economics

    This made the global business scenery to work together to conserve the environment.

  • international law

    In their first yearbook on global civil society the London School of Economics and Political Science defined global civil society as "sphere of ideas, values, institutions, organizations, networks, and individuals located between the family, the state

  • Effect of Economics, Government & Laws on Global Value Creation

    Assess how business operations can affect value creation in the global context. 1. Please evaluate how economics, the government, and laws could affect value creation from a global context.

  • Current Global Environment & Effect on Business

    If the initiatives are put into place to save the global environment, where is the money going to come from? In reality, yes, the current state of the global environment must be controlled to ensure that there even is a future state.

  • Contingency Theory & the Global Environment

    336028 Role of contingency planning as a corrective measure in global business Discuss the role of contingency planning as a corrective measure in global business According to www.istheory (2010), there are many forms of contingency theory.

View More Related Solutions