—————————————Assignment——————————————-
1. The accompanying table shows the price and yearly quantity sold of ice cream cones on Sidfield Island.
|
Price of Ice Cream Cones |
Quantity of Ice Cream Cones Demanded |
|
$1 |
3000 |
|
$2 |
2400 |
|
$3 |
1600 |
|
$4 |
800 |
- Using the midpoint method (show your work), calculate the price elasticity of demand when the price of an ice cream cone rises from $1 to $2. What does this estimate imply about the price elasticity of demand for ice cream cones?
- Using the midpoint method (show your work), calculate the price elasticity of demand when the price of an ice cream cone rises from $3 to $4. What does this estimate imply about the price elasticity of demand for ice cream cones?
- Notice that the estimates from (a) and (b) above are different. Why do price elasticity of demand estimates change along the demand curve?
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