Answer to Question #234722 in Microeconomics for carol

Question

Work out the price elasticity of demand for tickets from Lusaka to Livingston between 200 kwacha and 250

Answer 1

$Q d ​ =2000−5P$

$P=200 kwacha,$

$Q_d=2000-(5 \times 200)=1000$

$Old price quantity demanded=1000$

If $P=250 kwacha$

$=2000−(5×250)=750$

$New price quantity demanded=1500$$Price elasticity of demand =\frac{\frac{(Q_2-Q_1)}{(Q_1+Q_2)/2}}{\frac{(P_2-P_1)}{(P_2+P_1)/2}}$$= \frac{\frac{(750-1000)}{(750+1000)/2}}{\frac{(250-200)}{(250+200)/2} } \\ =-1.3$