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For a given price change,the change in the quanity

demanded will always be larger when demand is inelastic rather than
elastic.
A. TRUE
B.FALSE

User Stuckj
by
7.5k points

1 Answer

0 votes

Final answer:

The percentage change in quantity demanded with respect to a price change can be calculated using a math trick related to the price-quantity relationship. The formula involves the initial and new quantities, and it provides a quick estimation of the % change in quantity due to a change in price.

Step-by-step explanation:

The calculation of % change in quantity when there is a price change can be done approximately with the given math trick: Price x Quantity is related to the sum of the percent changes in price and quantity. To calculate the percentage change in quantity demanded (Qd), the formula is:

((New Quantity - Original Quantity) / ((New Quantity + Original Quantity)/2)) x 100

Using the information provided: From point B to point C, the price rises from $70 to $80, and Qd decreases from 2,800 to 2,600 units. Plugging these values into the formula:

((2,600 - 2,800) / ((2,600 + 2,800)/2)) x 100 = (% change in quantity)

This approach helps in understanding how price changes affect quantity demanded, which is a fundamental concept in economics and specifically in the study of supply and demand.

User Matthew Smith
by
8.4k points
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