Question

2. Suppose that your demand schedule for DVDs is as follows :
Price Quantity Demanded Quantity Demanded
(income = $10000) (income = $12000)
($) (Unit) (Unit)

8 40 50
10 32 45
12 24 30
14 16 20
16 8 12

Answer 1

Answer:

1. Law of Demand  Other things equal, the quantity demanded of a good falls when the price of good rises . Elasticity A measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants. Price Elasticity of Demand A measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price.

2. Question Suppose that your demand schedule for compact discs is as follows: Price QUANTITY DEMANDED QUANTITY DEMANDED $ (INCOME = $10,000) (INCOME = $12,000) 8 40 50 10 32 45 12 24 30 14 16 20 16 8 12

3. a. Use the midpoint method to calculate your price elasticity of demand as the price of compact discs increases from $8 to $10