Elasticity worksheet
Like other worksheets, I am not going to grade and provide feedback on every response . So please take it upon yourself to check your work and and dialogue with others. You don’t really need me to learn the material… in fact, I cannot learn it for you. (I will absolutely read all posts and jump in if there are common misunderstandings).
Note, you must post an answer before you are able to see my answers.
The demand for Peete’s coffee in Los Altos is such that at a price of $1.90 there is a quantity demanded of 155 cups per day. If the price is set at $2.10 then Qd falls to 145.
What is the price elasticity of demand over this range of prices?
If Peete’s is trying to maximize profits, should they raise the price to $2.10 (from $1.90)? Why? (note that profit = total revenues – total costs)
2. The price elasticity of demand for peanuts is 1.4. What does this mean?
3. What is the difference between price elasticity of demand and income elasticity of demand?
