Transcript Elasticity Qs

Elasticity
Was the price change beneficial?
P of Cadburys chocolate bars increase from 80 cents
to 1 dollar. Quantity demanded decreases from
1,000 bars per month to 950 bars
P of Mercedes 200E decreases from 40,000 dollars
to 38,000 Quantity demanded increases from 100
cars per month to 120 cars.
Questions
In a busy food hall the P of a Pizza decreases
from $5 to $4 and QD increases from 350
pizzas per week to 500.
Calculate the PED, change in Revenue and
display this information in using Graphs and
Revenue boxes.
Do you think that this company will be able to
sustain this change in P in the LR given its
competition? Explain your answer.
Questions
• If Kelloggs increase the P of Cornflakes from
$4 to $4.40 and demand decreases from 300
packets to 270 packets a week. Calculate the
PED and explain whether you feel the P
increase has been worthwhile in the SR and
LR.
• Include graphs in your explanation.
Questions
• A factory (Benetton) produces 2 products.
• T-shirts and Socks
• The price of T-shirts falls from $22 to $20 and
QD increases from 40 to 60 units. Whilst the
price of socks decrease from $5 to $4 and QD
increases from 180 to 200 units.
• Calculate the PED of both products and
explain (including the use of Graphs) why the
elasticity of a product changes as P decreases.