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Chapter 5: Q.10 (page 130)

What is the formula for calculating elasticity?

Short Answer

Expert verified

Elasticity is computed by dividing the % variation in quantity over the % variation in price.

Step by step solution

01

Step 1. Definition:

Elasticity is a term used in economics to describe how sensitive one parameter is to variations in other.

02

Step 2. Formula:

The ratio among the percentage variation in quantity demanded or supplied and the equivalent percent variation in price is known as elasticity (E). The formula to compute the elasticity is given below:

E=%changeinquantity%changeinprice

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Most popular questions from this chapter

From the data in Table 5.6 about supply of alarm clocks, calculate the price elasticity of supply from: point J to point K, point L to point M, and point N to point P. Classify the elasticity at each point as elastic, inelastic, or unit elastic.

PointPriceQuantity supplied
J\(850
K\)970
L\(1080
M\)1188
N\(1295
P\)13100

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 is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens to the measured elasticity? How would you explain that?

31. Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?

The federal government decides to require that automobile manufacturers install new anti-pollution equipment that costs $2,000 per car. Under what conditions can carmakers pass almost all of this cost along to car buyers? Under what conditions can carmakers pass very little of this cost along to car buyers?
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