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    Estimating the Cost of Optical Sensors Based on the Resolution of the Sensor

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    1. Compute the price elasticity of demand for paint and show your calculations.

    Price Elasticity of Demand (PEoD)
    = (% CHANGE IN QUANTITY DEMANDED) / (% CHANGE IN PRICE)
    Price Quantity Demanded
    $3.50 20 Gallons
    $3.00 35 Gallons

    .

    PRICE OLD = $3.00
    PRICE NEW = $3.50
    Q DEMAND OLD = 35 GALLONS
    Q DEMAND NEW = 20 GALLONS

    Quantity demand = [QDEMAND (NEW) - QDEMAND (OLD)] / QDEMAND (OLD)
    = [(20 - 35) / 35] = -0.4285

    Change in quantity demanded equals -42.85%

    Change in price = [PRICE (NEW) - PRICE (OLD)] / PRICE (OLD)
    = [(3.50 -3.00) / 3.00] = 0.1666
    Change in price equals 16.66%

    PEoD = (% Change in Quantity Demanded) / (% Change in Price)
    = (-42.85) / (16.66)
    = -2.5720

    Price elasticity = absolute value only

    ANSWER:

    Therefore the price elasticity of demand when the price increases from $3.00 to $3.50 the solution is 2.5720.

    2. Decide whether the demand for paint is elastic, unitary elastic, or inelastic.

    • If PEoD > 1 then Demand is Price Elastic (Demand is sensitive to price changes)
    • If PEoD = 1 then Demand is Unit Elastic
    • If PEoD < 1 then Demand is Price Inelastic (Demand is not sensitive to price changes)

    ANSWER:
    Elastic, demand is very sensitive to price changes.

    © BrainMass Inc. brainmass.com June 4, 2020, 3:59 am ad1c9bdddf
    https://brainmass.com/statistics/statistical-figures/cost-optical-sensors-based-resolution-sensor-545512

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    1) You are estimating the cost of optical sensors based on the resolution of the sensor. You decide to calculate the coefficient of determination (R2) as part of determining the goodness of fit of an equation. Using the preliminary calculations below, calculate the R2 and determine its meaning.

    R ...

    Solution Summary

    The expert estimates the cost of optical sensors based on the resolution of the sensor.

    $2.19

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