Elasticity
Suppose the price of apples rises from $3.50 a pound to
$4.00 and your consumption of apples drops from 30 pounds of apples a month to
20 pounds of apples. Calculate your price elasticity of demand of apples. What
can you say about your price elasticity of demand of apples? Is it Elastic,
Inelastic, or Unitary Elastic? Be sure to show the work you used to support
your answer.
1.a. State clearly below the formula(s) you have applied in
order to calculate the elasticity (calculation is not the same as formula)?.
(15 points)
1. b. Draw up table showing breakdown of
data/calculations/results on the basis of which you arrived at your decision in
1c. (20 points)
1.c. What is your conclusion regarding whether the demand is
elastic/inelastic/unit elastic? Explain your answer and define terms relevant
to elasticity used in your explanation. (20 points)
