Need double check on Price Elasticity Please

  • Thread starter Thread starter Kaleb
  • Start date Start date
  • Tags Tags
    Elasticity
AI Thread Summary
The discussion revolves around calculating the price elasticity of demand for soda when its price doubles from $1.00 to $2.00, while the quantity demanded remains unchanged. The initial attempt incorrectly applied the formula, leading to a misunderstanding of the percentage changes involved. The correct interpretation indicates that if the quantity demanded does not change, the percentage change in quantity is zero, making the elasticity calculation invalid. Participants clarify that the price elasticity of demand is actually perfectly inelastic in this scenario, as demand remains constant despite the price increase. The conversation highlights the importance of accurately applying economic formulas to understand demand elasticity.
Kaleb
Messages
47
Reaction score
0
[SOLVED] Need double check on Price Elasticity Please

Question:
If the price of soda doubles from $1.00 per can to $2.00 per can and you buy the same amount, what is your price elasticity of demand for soda, and is it considered elastic or inelastic.

Formula:
% of Change in Quantity of Demand / % of Change in Price

Attempt:
I figure since the demand is the same the formula is 1/.5 = 2.0 So its inelastic correct?

I know this is a stretch on the forum considering its more economics. But this forum never let's me down :)
 
Physics news on Phys.org
Yes, your demand is perfectly inelastic over that price range. (It might not be perfectly inelastic if it went to a million dollars. :p.)
 
Kaleb said:
Question:
If the price of soda doubles from $1.00 per can to $2.00 per can and you buy the same amount, what is your price elasticity of demand for soda, and is it considered elastic or inelastic.

Formula:
% of Change in Quantity of Demand / % of Change in Price

Attempt:
I figure since the demand is the same the formula is 1/.5 = 2.0 So its inelastic correct?

I know this is a stretch on the forum considering its more economics. But this forum never let's me down :)
If "you buy the same amount" why is the "% of Change in Quantity of Demand" equal to 1? I would have thought the change was 0. Also if "If the price of soda doubles from $1.00 per can to $2.00 per can" why is the "% of Change in Price" 0.5? I would have thought it would be 100%.
 

Thread 'Finding the number of ways to arrange identical balls in a circle (3 different colors)'

I tried to combine those 2 formulas but it didn't work. I tried using another case where there are 2 red balls and 2 blue balls only so when combining the formula I got ##\frac{(4-1)!}{2!2!}=\frac{3}{2}## which does not make sense. Is there any formula to calculate cyclic permutation of identical objects or I have to do it by listing all the possibilities? Thanks
View full post »

Thread 'Greatest possible value of a constant in polynomial'

Since ##px^9+q## is the factor, then ##x^9=\frac{-q}{p}## will be one of the roots. Let ##f(x)=27x^{18}+bx^9+70##, then: $$27\left(\frac{-q}{p}\right)^2+b\left(\frac{-q}{p}\right)+70=0$$ $$b=27 \frac{q}{p}+70 \frac{p}{q}$$ $$b=\frac{27q^2+70p^2}{pq}$$ From this expression, it looks like there is no greatest value of ##b## because increasing the value of ##p## and ##q## will also increase the value of ##b##. How to find the greatest value of ##b##? Thanks
View full post »

Similar threads

IB Micro Economics, PED (price elasticity of demand) and Firms
Replies
1
Views
4K
Marketing Research (Cost, Revenue, Etc.)
Replies
11
Views
5K
Tax incidence and Price Elasticity
Replies
7
Views
7K
Calculation on Price Elasticity of Demand problem Need Advices .
Replies
4
Views
12K
Revenue & Elasticity at Different Prices
Replies
8
Views
11K
Please help solving this problem: Reading & Writing Records in a Structure
Replies
10
Views
2K
Understanding the derivation for Elastic Potential Energy.
Replies
2
Views
2K
Profit Problem (need to maximize profit) and respective price elasticities
Replies
1
Views
6K
Motion of particle dropped onto an elastic band
Replies
3
Views
5K
What is the difference between elastic and inelastic collisions?
Replies
1
Views
2K

Hot Threads

Recent Insights

Back
Top