Suppose you are a painter, and the price of a gallon of paint increases from $3.
ID: 1251627 • Letter: S
Question
Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a month. Perform the following:
1.Compute the price elasticity of demand for paint and show your calculations.
2.Decide whether the demand for paint is elastic, unitary elastic, or inelastic.
3.Explain your reasoning and interpret your results.
what im really looking for is the formula in which to apply my answer.. how do i calculate this?
Explanation / Answer
a) Price elasticity of Demand : ((20-35)/35)/((3.5-3)/3)= -2.57143 b)Demand for paint is elastic c)change in demand is greater than the change in price, the demand on the paint is said to be elastic. means, slight changes in price lead to huge changes in the demand of paint.