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.
Price Demand Supply
$2.25 20 2
$3.25 17 5
$4.25 14 8
$5.25 11 11
$6.25 8 14
$7.25 5 17
$8.25 2 20
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?

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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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Price	Demand	Supply
$2.25	20	2
$3.25	17	5
$4.25	14	8
$5.25	11	11
$6.25	8	14
$7.25	5	17
$8.25	2	20