Calculate the absolute value of the price elasticity of demand for a for a fall

Question

Calculate the absolute value of the price elasticity of demand for a for a fall in price from $9 to $8 (which is associated with a rise in the quantity demanded from 2 to 3): Price elasticity of demand Calculate the absolute value of the price elasticity of demand for a rise in price from $8 to $9 is associated with a fall in the quantity demanded from 3 to 2): Price elasticity' of demand = Using the mid-point method, calculate the absolute value of the price elasticity of demand between $8 and $9: Price elasticity of demand = Using the mid-point method, is demand elastic or inelastic over this range? As price falls, is marginal revenue positive or negative?

Explanation / Answer

1. PED = (3-2) / (8-9) * (9+8) / (2+3) = -3.4

   The absolute value of price elasticity of demand = 3.4

2. PED = (2-3) / (9-8) * (8+9) / (3+2) = -3.4

   The absolute value of price elasticity of demand = 3.4

3. PED = 3.4

4. Demand is elastic.Because PED is greater than 1

5. Positive

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