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Estimating the price elasticity coefficients

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Using the midpoints formula, calculate the elasticity coefficient for each price level, starting with the coefficient for the

Price Quantity Total Elasticity Elastic or
Demanded Revenue Coefficient Inelastic

$4 100 $400.00 XXXX XXXX
6 80 $480.00 __________ __________
8 60 $480.00 __________ __________
10 40 $400.00 __________ __________
12 20 $240.00 __________ __________
14 1 $14.00 __________ __________

For each coefficient, indicate what type of elasticity is indicated, elastic demand, inelastic demand, or unitary demand.

Explain how the elasticity changes as price increases. Why is this happening?

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Solution Summary

The solution describes the steps to calculate price elasticity coefficients with the help of mid point formula. It also analyzes how the elasticity varies with price.

Solution provided by:
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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