Price Elasticity of Demand is a measure of how responsive demand is to a change in price. Name_____ P.____ Worksheet on Elasticity Step 1 - E L A S T I C or INELASTIC? p��O��Uz���1�>)a�����@J���r���j���?J7E}g�H�"glx|f�A���J ������[�X��A��� ��j�Z%�3���~7�b�_.�c�D��_�h�$�L�(�J��t�`��CУw� � =v��(d�y�1��A�A�C��D��I��#fsǗ��W�����8N+#��h��)C���x���^ߴ Lesson Worksheet - Price Elasticity of Demand. xlsx, 13 KB. Worksheet on Elasticity. This lesson worksheet / quiz provides multiple choice, short answer and fill in the blank questions covering price elasticity of demand . Calculate the Price elasticity of demand, ε for the following examples: a) Demand is given by Q = 50 – P at the price of $10. Elasticity of Demand DIRECTIONS: ... Price Quantity $3 $6 $9 $12 $15 $18 Price 12 4 8 16 20 24 28 32 Quantity 6 7 8 B . = -1). Price Elasticity of Demand is a measure of how responsive demand is to a change in price. No, unit elasticity means that demand and price change by the same amount. ‰ As a result, the quantity demanded for notebook computers rose from 500 to 550. a. price elasticity of demand is A)3.00. ___________5075150135    4. If the company wants to estimate the value of the price elasticity of their product, then they need to judge it against the following criteria: Number of ____________________: Luxuries vs. ___________________: Percentage of ________________ spent on good: _____________ to adjust: Judge the products in the table below to decide whether you think they will be elastic or inelastic: ProductElastic or inelastic?Why?Salt  Hawaiian Vacation  Apple iPhone  Cigarettes  Tap Water  Gasoline  Dasani Water   8 9 P Q v = \ b i Î × á ÷ < tea and coffee The cross price elasticity tends to be positive – if two goods are complements e.g. View Elasticity Worksheet.pdf from EC 201/202 at North Carolina State University. c) Demand is given by Q = 25 - .25P, at the price of $40. �j��D������6��x��S��I�� Naturally, this is not the case. So a 1 percent decrease in the quantity harvested will lead to a 2.5 percent rise in the price. An Elasticity of between 0 and 1.0 = INELASTIC demand Use the formula above to calculate values of Price Elasticity for all the situations below: PriceQuantity% change in quantity demanded% change in priceElasticity of DemandInitialNewInitialNew253010040    1. 3 M – ˜ �   ½ Ú ÷ ı & 6 X m – § W X _ ` c d k l o s t – — ¹ º İ Ş ÷í÷í÷í÷Şí÷ÕËÕÁ¹µ¹µ¹µ¹¦”‰u”u”u”u”‰f‰f‰f‰fh.k h¹U B*OJ QJ ph 'h.k h¹U 0J 5�B*OJ QJ \�ph h.k h¹U OJ QJ #h.k h¹U 5�B*OJ QJ \�ph h.k h¹U CJ OJ QJ aJ hşr' hşr' hşr' 5�hwk hşr' 5�CJ hwk h¹U >*CJ hwk h¹U CJ hwk h{lì CJ OJ QJ aJ hwk h{lì 5�CJ hwk h{lì CJ (ö ÷ 6 m § 0 B W £ ˜ ˜ � € { o o o o o $dP $If a$ gd¹U dğ &d PÆ ÿ gdşr' dğ gdşr' dğ ¤ [$ gdşr' \ kd $$If – Ö0 Óÿ_ö€ €j ö 6ö ö Ö ÿ ÿÖ ÿ ÿÖ ÿ ÿÖ ÿ ÿ3Ö 4Ö aö pÖ ÿ ÿ ÿ ÿ W X ` d , $dP $If a$Ó kdˆ $$If –. cross-price elasticity of demand is, the more strongly the two goods are gross complements. If a price change leads to a considerably bigger change in quantity demanded, we would consider the good to be responsive to a price change—hence . Tes Classic Free … _________________________ 4. % Change in Q.D. The negative sign tells us that the quantity demanded for gasoline moves in the opposite direction to the price of gasoline. Demand Curve for Computers 6. ¢ á" t Ê Ë š š š š š Ê Ë Ë ¿ ¿ Û ß l l l š . Price Elasticity of Demand is a measure of how responsive demand is to a change in price. When the price of a doctor’s visit rises, people will not dramatically reduce the number of times they go to the doctor, although they might go somewhat less often. PED Worksheet Calcuations. Step 1 - E L A S T I C or INELASTIC? The % change in demand = 13.3% following a 20% fall in price – giving a co-efficient of elasticity of 0.67 (i.e. Print page. Price elasticity of demand for agricultural products is 0.4. _________________________3. Shampoo 10. If a price change leads to a considerably bigger change in quantity demanded, we would consider the good to be responsive to a price change—hence elastic. B)elastic. ƒ CD’s 9. _________________________ 4. _________________________ 2. demand elasticity elasticity unit elastic inelastic Law of Demand _____ is the extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product. Info. Step 1 - E L A S T I C or INELASTIC? ƒ If a price change leads to a considerably bigger change in quantity demanded, we would consider the good to be responsive to a price change—hence elastic. %�쏢 Cars 7. _________________________ 2. The simple demand curve seems to imply that price is the only factor which affects demand. stream (b) What is the price elasticity of demand when the price is $30? Answer key Cross_Price_Elasticity_Key.pdf Share: Share on Facebook Share on Twitter Share on Linkedin Share on Google Share by email. UNIV 60E – Worksheet 7 (Calculating Price Elasticity) 3 March 2009 Worksheet 7 – Calculating Price Elasticity In economics, we use price elasticity to measure consumers' and producers' sensitivity to changes in the price of a good. Subjects: Economics . Price Elasticity of Demand Calculations. An answer key document is also available. Geoff Riley 13th August 2010. It should be flatter more .Here ,the elasticity of demand is more than 1. A lesson worksheet / test on cross price elasticity of demand is available here. About this resource. Different elasticity values will lead to different effects on the level of total revenue a firm receives. O*�Bs;&4�x��r�{�Z��)`��Y3֚�"UE���Ԡ� �P��&X�w �x�`p�J����T�&����C���FOnOc�h��j�-" )�0�(��o�ɾ���t�v��3y�S��мW8OOq�V9�5��9�l��CVV� N3Pڦ�f�Y���VF�G�@�iyb��T~��gP��0 : __ ___Class:_____ Date:_____ Activity 1 Instruction: 1. Mrs. Otten, owner, decides to decrease the price of these computers to $750. Price elasticity of demand is usually referred to as elasticity of demand. c. A cross-price elasticity of 0.63 implies that a 1% increase in the price of Pepsi would increase the quantity of Coke demanded by 0.63%. k Benson just opened a business selling calculators. %PDF-1.4 This is the case of luxuries or goods with several close substitutes. ___________In each case identify whether you would describe it as elastic / unitary elastic / inelastic 1. inelastic). ___________5075150135    4. Which of the following statements correctly describes the price elasticity of demand? ___________407012090    2. ­ We use the formula: CALCULATING ELASTICITY STEP 1: The formula used to calculate the percentage change in quantity demanded is: [QDemand(NEW) - QDemand(OLD)] / QDemand(OLD) STEP 2: The formula used to calculate the percentage change in price is: [Price(NEW) - Price(OLD)] / Price(OLD) STEP 3: (STEP 1) / (STEP 2) STEP 3: PRICE ELASTICITY OF DEMAND =percentage change in Q demandpercentage change in priceSTEP 4: 1. If, however, a similar price change leads to a much smaller change in demand, we would consider it inelastic. 4. C)0.75. A change in demand for a )Elastic Inelastic Step 3 - What determines E L A S T I C I T Y? 5 0 obj ___________407012090    2. Cigarettes are addictive and so people tend to be less responsive to changes in price. Price Elasticity of Demand is a measure of how responsive demand is to a change in price. 1. Basic Exercises economicsentrance.weebly.com dseentrance.com 13 Elasticity Practice problems 1. x (Increase or decrease? PED Worksheet Calcuations. b) Demand is given by Q = 100 - P, at the price of $50. 19) 20)The table above gives the demand schedule for peas. Price elasticity of demand - how demand responds to a change in price. Calculate the percentage change in price _____ b. D)unit elastic. Categories & Ages. ___________Has revenue increased or decreased in each case? n~q������.Ԫ� ~��!��k�.4^����;\H�:i������V�~9\�j�T�.��BAxӬ������Q�h���w W��)W���G;�~�5����4]_�ܕ 4. Exercise 6 Solution Chapter 6 Elasticity: The Responsiveness of Demand and Supply 6.1 The Price Elasticity of Demand and Its Measurement Recall the assumption made by 2. S T — ˜ ½ ö ÷ ï ê å Ñ ¿ ° ° ° ° ° ° ° ° � � dğ ¤ ¤ $If [$ \$ gd{lì dğ ¤ ¤ [$ \$ gd{lì $dğ ¤ ¤ [$ \$ a$gdşr' ¤ ¤ &d PÆ ÿ [$ \$ gdşr' gd¹U gd¹U $a$gd.k $a$gdwk ‰ Report a problem. For example, if a good is elastic and a firm increases the price by 10%, they will lose more than 10% of their business, and so although they are getting more money for each one they sell, they are selling far fewer. Total Revenue (TR)=Price x Quantity Sold IF Price Increases and (TR) Total Revenue decreases = Elastic IF Price decreases and (TR) Total Revenue increases = Elastic IF Price Increases and (TR) Total Revenue increases = Inelastic IF Price decreases and (TR) Total Revenue decreases = Inelastic To see the effect that elasticity has on total revenue, fill in the table below: PriceQuantityRevenuePrice Elasticity of DemandInitialNewInitialNewBefore price changeAfter price change253010040    1. Test Cross_Price_Elasticity.pdf. Yes, that's correct. 3. 2. Elasticity of Demand Exercises Problems 1. This numerical example illustrates an empirical regularity: A firm’s demand curve becomes less elastic when the price of a substitute good goes up. In this situation when demand is price elastic, a fall in price leads to higher total consumer spending/producer revenue. Two Extreme Cases of Price Elasticity of Demand At any price above $5, quantity demanded is zero At exactly $5, consumers will buy any quantity At any price below $5, quantity demanded is infinite D 2 0 $5 Quantity of tennis balls (dozens per year) (b) Price Elastic Demand: Price Elasticity of Demand = ∞ Price of pink tennis balls (per dozen) ___________2002208064    3. Business and finance / Marketing ; Economics / Microeconomics; 14-16; 16+ View more. ïâïÓĵ¦—¦†¦v¦—¦†¦gbZJ@ hwk h{lì 5�CJ hşr' hşr' 5�CJ OJ QJ aJ hşr' hşr' 5� hşr' 5�hşr' hşr' CJ OJ QJ aJ h{lì h¹U 5�CJ OJ QJ aJ h{lì h¹U 0J CJ OJ QJ aJ h{lì h@[ CJ OJ QJ aJ h{lì h¹U CJ OJ QJ aJ h.k h¹U CJ OJ QJ aJ h.k h.k CJ OJ QJ aJ h.k h¹U CJ OJ QJ aJ hwk 5�CJ OJ QJ aJ h.k h.k 5�CJ OJ QJ aJ 9 Q v Ù l 1. Ó Ë ¿ Ë ¿ ¤ l š ¤ l l : ¤ , ä ¿ ÿÿÿÿ pÂó³|Õ ß È Ğ Complete the diagram below using the information your partner gives you. �0+�3�5��5���dr��n��������,��_��[���Iƫ���2`. *****Link to Fillable Google Slides Include . Demand Curve for Casting Materials 5. 2. x��[m�$��>��#E��vl�_� $�n%>(B�Ƒ��#(����kyƽ{��‰ b�i��?~�.���-b�j�o1>���[�~����{�����w;��/p����KtKX�].����.�T. The test has a mixture of short answer questions and multiple choice questions on cross price elasticity of demand. Grades: 10 th, 11 th, 12 th. Listen to the information your partner gives you. <> elastic. Price Elasticity of Demand Group Assignment Roses on Valentine’s Day Relatively inelastic Lay Potato The cross price elasticity of demand for good i with respect to the price of good j is : % change in quantity demanded of good i % change in the price of good j This may be positive or negative The cross price elasticity tends to be negative – if two goods are substitutes: e.g. EDEXCEL Alevel Business 1.2.5 Income elasticity of demand YED practice questions worksheet #1 Included: Student worksheet Teacher copy with answers. Demand Good Price elasticity Inelastic demand Eggs 0.1 Beef 0.4 Stationery 0.5 Gasoline 0.5 Elastic demand Housing 1.2 Restaurant meals 2.3 Airline travel 2.4 Foreign travel 4.1 Price elasticity of demand < 1 Price elasticity of demand > 1 If a price change leads to a considerably bigger change in quantity demanded, we would consider the good to be responsive to a price change—hence elastic. Ù elastic demands. To get a more precise measure of the responsiveness to a price change we can calculate a value for price elasticity of demand. Consider a price change further down the estimated demand curve (from R10 per unit to R8 per unit). For linear demand, elasticity is higher at a price the lower is the choke price: E A = P A P ¯ A −P A Airbus’ choke price when P B = 24 is P¯ A = 36 , whereas Airbus’ choke price when P B = 30 is P¯ A = 40 .