8
Price Elasticity on the Supply & Demand Curve
Name: ____Sara Memic_________________
Directions: Complete the questions below by referring to the corresponding information or websites located above each question set (A-C). Answer the questions electronically in RED text or hand write the answers, scan the document, and upload it in this assignment box.
A. Watch this 8 minute video clip about demand and answer the questions below: http://www.youtube.com/watch?v=lmr4-ocHjLA 1. Why is calculating elasticity important for businesses?
- companies use it just how elastic something is. A change in quantity and price. The company will know the best way to keep their business great. How much companies will charge you
2. Write the formula for elasticity (hint: long formula on left side of the whiteboard).
- percent change of quantity over percent vs.price
3. Is an elastic product greater, equal, or less than 1?
- greater: elastic. Less: inelastic. Equal: unit elastic
4. What does unit elastic mean?
- there is an exact percent of price and demand
5. In the first example that the teacher walked you through, he found after his calculations that the outcome was elastic. What would this mean for a business owner? (hint: he explains this after he finds out it is elastic)
- business owner will know how much to charge and measure how much a change of quantity will be.
B. Draw a graph AND calculate the price elasticity of the demand for chocolate bars if the price goes from $2 to $3, causing you to change your weekly consumption from 8 bars per week to 5. Show all work and explain what the outcome means to a business!! (hint: refer to the above video process first before completing this section)
SINCE I COULDNT DRAW A GRAPH, I DREW IT ON PAPER AND TOOK A PICTURE OF IT. HERE IT IS FOR BOTH B AND C.
C. Draw a graph AND calculate the price elasticity of the supply for concert tickets if the price goes from $50 to $60, causing you to change your weekly consumption
Name: ____Sara Memic_________________
Directions: Complete the questions below by referring to the corresponding information or websites located above each question set (A-C). Answer the questions electronically in RED text or hand write the answers, scan the document, and upload it in this assignment box.
A. Watch this 8 minute video clip about demand and answer the questions below: http://www.youtube.com/watch?v=lmr4-ocHjLA 1. Why is calculating elasticity important for businesses?
- companies use it just how elastic something is. A change in quantity and price. The company will know the best way to keep their business great. How much companies will charge you
2. Write the formula for elasticity (hint: long formula on left side of the whiteboard).
- percent change of quantity over percent vs.price
3. Is an elastic product greater, equal, or less than 1?
- greater: elastic. Less: inelastic. Equal: unit elastic
4. What does unit elastic mean?
- there is an exact percent of price and demand
5. In the first example that the teacher walked you through, he found after his calculations that the outcome was elastic. What would this mean for a business owner? (hint: he explains this after he finds out it is elastic)
- business owner will know how much to charge and measure how much a change of quantity will be.
B. Draw a graph AND calculate the price elasticity of the demand for chocolate bars if the price goes from $2 to $3, causing you to change your weekly consumption from 8 bars per week to 5. Show all work and explain what the outcome means to a business!! (hint: refer to the above video process first before completing this section)
SINCE I COULDNT DRAW A GRAPH, I DREW IT ON PAPER AND TOOK A PICTURE OF IT. HERE IT IS FOR BOTH B AND C.
C. Draw a graph AND calculate the price elasticity of the supply for concert tickets if the price goes from $50 to $60, causing you to change your weekly consumption