Elasticity Assignment

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Read chapter 6 Elasticity Complete parts 1,2,3 below Part I Use the percentage change formula to complete the following assignment. Use the table below to complete the following exercise. Determine the price elasticity of demand at each quantity demanded. Go from $5 to $10 then from $10 to $15 to $20 and so on. Plot the price and quantity data. Indicate the price elasticity value at each point. Illustrate your result on a downward sloping demand curve. What happens to the elasticity value as you move down the demand curve? Price                  Quantity Demanded $5                                 100 10                                   80 15                                   60 20                                   40 25                                   20 30                                   10   Part II Answer the following questions: To compute the P.E.D. we divide the ____________by___________. If a 10% increase in price decreases the quantity demanded by 12% the P.E.D. is __? What happens to PED coefficient as we move down the demand curve? Explain why audio tapes are more elastic in the long-run than in the short-run?   Part III How would the following changes in price affect total revenue?  That is, would total revenue increase, decline, or remain unchanged? Price falls and demand is inelastic. Price rises and demand is elastic. Price rises and supply is elastic. Price rises and supply is inelastic. Price rises and demand is inelastic. Price falls and demand is elastic. Price falls and demand is of unit elasticity