Details: 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.
3.Explain your reasoning and interpret your results.
2â?"3-page Word document© BrainMass Inc. brainmass.com April 3, 2020, 9:22 pm ad1c9bdddf
First, let me start by giving you a brief overview of elasticity of demand; after which I will seek to assist you with how to answer questions posted.
Overview of Elasticity
Elasticity may be defined as a measure of responsiveness which tells us how a dependent variable such as quantity responds to a change in an independent variable such as price. It is categorized as a cause-and-effect relationship in economics (in which you ask the question, 'if one thing happens, how will it affect something else') and can be applied to income, the quantity of a product supplied by a firm, or to demand.
In the case of demand, what you will consider is whether a given ...
This solution gives an overview of the price elasticty of demand. It explains and shows how to calculate elastic, inelastic and unitary demand; in addition it also tells how to determine whether demand for a good is elastic, inelastic or unitary elastic. Interpretation of results is also given. The solution is adequately referenced.