You are a painter, and the price of a gallon of paint increases from $3.00 a gallon from 3.50 a...
Question:
You are a painter, and the price of a gallon of paint increases from {eq}\$3.00 {/eq} a gallon from {eq}3.50 {/eq} a gallon. Your usage of paint drops from {eq}35 {/eq} gallons a month to {eq}20 {/eq} gallons a month. Perform the following:
A) Compute the price elasticity of demand for paint and show your calculations.
B) Decide whether the demand for paint is elastic, unitary elastic, or inelastic.
C) Explain your reasoning and interpret results?
Price Elasticity of Demand:
The price elasticity of demand equals the percentage change in the quantity demanded divided by the percentage change in price.
Answer and Explanation: 1
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View this answerA) Price elasticity of demand (E):
{eq}\displaystyle E=\frac{20-35}{3.5-3}\cdot \frac{3}{35}=-.086 {/eq}
B) The demand for paint is inelastic.
C)...
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Price Elasticity of Demand: Definition, Formula & Example
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Chapter 3 / Lesson 54
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Learn what price elasticity is. Discover how to find price elasticity of demand, study examples of price elasticity, and examine a price elasticity graph.
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