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Calculate the price elasticity of demand for each price change. Note, you will begin with the...

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Economics

Calculate the price elasticity of demand for each price change.Note, you will begin with the change in price from $2.25 to$3.25.

PriceDemandSupply
$2.25202
$3.25175
$4.25148
$5.251111
$6.25814
$7.25517
$8.25220

Assume a merchant was thinking of decreasing the price from$4.25 to $3.25. Based on your calculations, is the price decrease agood idea for the merchant? Please explain why.

How much would consumers respond to a price increase from $2.25to $3.25. What is the effect on the merchant?

Answer & Explanation Solved by verified expert
3.9 Ratings (776 Votes)
Let price elasticity be denoted by Ed From 225 to 325 Ed 225325 20 225 2017 1 20 225 3 20 675 296 From 325 to 425 Ed 325425 17 325 1714 1 17 325 3 17 975 174 From 425 to 525 Ed 425525    See Answer
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