Question
The short-run price elasticity of demand for tires is 0.90. The mid-point formula was used for this calculation.
Part 2
If an increase in the price of petroleum (used in producing tires) causes the market prices of tires to rise from $50
to $60
,
by what percentage would you expect the quantity of tires demanded to change?---%.
(Your answer should have one decimal place, and should not have a negative sign).
Part 2
If an increase in the price of petroleum (used in producing tires) causes the market prices of tires to rise from $50
to $60
,
by what percentage would you expect the quantity of tires demanded to change?---%.
(Your answer should have one decimal place, and should not have a negative sign).
Answers
GPT 3.5
To calculate the percentage change in quantity demanded using the mid-point formula, you can use the following formula:
Percentage Change in Quantity Demanded = (Elasticity / (1 + Elasticity)) * (Percentage Change in Price)
Given that the short-run price elasticity of demand for tires is 0.90 and the price of tires increases from $50 to $60, the percentage change in price is:
Percentage Change in Price = ((New Price - Old Price) / Old Price) * 100
= (($60 - $50) / $50) * 100
= 20%
Substituting the values into the formula, we have:
Percentage Change in Quantity Demanded = (0.90 / (1 + 0.90)) * 20%
= (0.90 / 1.90) * 20%
≈ 0.4737 * 20%
≈ 9.47%
Therefore, you would expect the quantity of tires demanded to change by approximately 9.47%.
Percentage Change in Quantity Demanded = (Elasticity / (1 + Elasticity)) * (Percentage Change in Price)
Given that the short-run price elasticity of demand for tires is 0.90 and the price of tires increases from $50 to $60, the percentage change in price is:
Percentage Change in Price = ((New Price - Old Price) / Old Price) * 100
= (($60 - $50) / $50) * 100
= 20%
Substituting the values into the formula, we have:
Percentage Change in Quantity Demanded = (0.90 / (1 + 0.90)) * 20%
= (0.90 / 1.90) * 20%
≈ 0.4737 * 20%
≈ 9.47%
Therefore, you would expect the quantity of tires demanded to change by approximately 9.47%.
AOL
wrong answer
GPT 3.5
Apologies for the error in the previous response. Let me calculate the correct answer.
Using the midpoint formula, we can calculate the percentage change in quantity demanded as:
Percentage Change in Quantity Demanded = (Elasticity / (1 + Elasticity)) * (Percentage Change in Price)
Given that the price elasticity of demand for tires is 0.90 and the price of tires increases from $50 to $60, the percentage change in price is:
Percentage Change in Price = ((New Price - Old Price) / Old Price) * 100
= (($60 - $50) / $50) * 100
= 20%
Substituting the values into the formula, we have:
Percentage Change in Quantity Demanded = (0.90 / (1 + 0.90)) * 20%
= (0.90 / 1.90) * 20%
≈ 0.4737 * 20%
≈ 9.47%
Therefore, you would expect the quantity of tires demanded to change by approximately 9.47%.
Using the midpoint formula, we can calculate the percentage change in quantity demanded as:
Percentage Change in Quantity Demanded = (Elasticity / (1 + Elasticity)) * (Percentage Change in Price)
Given that the price elasticity of demand for tires is 0.90 and the price of tires increases from $50 to $60, the percentage change in price is:
Percentage Change in Price = ((New Price - Old Price) / Old Price) * 100
= (($60 - $50) / $50) * 100
= 20%
Substituting the values into the formula, we have:
Percentage Change in Quantity Demanded = (0.90 / (1 + 0.90)) * 20%
= (0.90 / 1.90) * 20%
≈ 0.4737 * 20%
≈ 9.47%
Therefore, you would expect the quantity of tires demanded to change by approximately 9.47%.