Economics Test Review- I have questions!?


Hey everyone. I am trying to review my past exams for my economics exam comming up and I was hoping that some people would be able to help me out with a few quesions on here. Thanks for looking!
1. Calculate consumer surplus in the market assuming equilibrium in teh market exists and that demand is linear.
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The Price Elasticity of Demand (commonly known as just price elasticity) measures the rate of response of quantity demanded due to a price change. The formula for the Price Elasticity of Demand (PEoD) is:

PEoD = (% Change in Quantity Demanded)/(% Change in Price)

Check out this website, it will help you with some of the formulas. for the question about $12 toys X 500 vs $8 toys X 1100

There is always a follow up question as well if the good is price elastic, unit elastic, or price inelastic.

* If PEoD > 1 then Demand is Price Elastic (Demand is sensitive to price changes)

* If PEoD = 1 then Demand is Unit Elastic

* If PEoD < 1 then Demand is Price Inelastic (Demand is not sensitive to price changes)

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