Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 5: Q. 10 (page 130)

What is the formula for calculating elasticity?

Short Answer

Expert verified

PriceElasticityofDemand=percentchangeinquantitypercentchangeinprice.

Step by step solution

01

Step 1. Definition

Elasticity is a term used in economics to describe how the cumulative amount requested of a product or service changes as the price of that thing or service changes. If the quantity demand for a product varies more than proportionately as its price rises or lowers, it is said to be elastic.

02

Step 2. Explanation

Elasticity is a measure of responsiveness that is computed by dividing one variable's percentage change by another's percentage change.

For instance, price elasticity can be obtained by the ratio of change in quantity and change in price.

Priceelasticity=%Changeinquantity%Changeinprice

Income elasticity can be obtained by the ration of change in quantity and change in income.

Incomeelasticity=%changeinquantity%changeinincome

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

In a market where the supply curve is perfectly

inelastic, how does an excise tax affect the price paid by

consumers and the quantity bought and sold?

When someone’s kidneys fail, the person needs to have medical treatment with a dialysis machine (unless or until they receive a kidney transplant) or they will die. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that the supply of such dialysis machines will primarily determine the price.

Say that a certain stadium for professional football has 70,000 seats. What is the shape of the supply curve for tickets to football games at that stadium? Explain.

What would the gasoline price elasticity of supply mean to UPS or FedEx?

What is the formula for the cross-price elasticity of demand?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free