The Following Information Pertains to Three Different Products Being Sold

question 98

Essay

The following information pertains to three different products being sold by Leone Company:
$\begin{array}{rrrrr}\underline{\text { Product }}&\underline{\text { Old Price }}&\underline{\text { New Price }} & \underline{\text { Old Quantity }} &\underline{ \text { New Quantity }}\\\mathrm{X} & \$ 15.00 & \$ 14.25 & 2,000 & 2,200 \\\mathrm{Y} & 20.00 & 18.50 & 3,000 & 3,300 \\\mathrm{Z} & 25.00 & 27.50 & 4.000 & 3.600\end{array}$
a.Determine the price elasticity of demand for each of the products.
b.Which products have an elastic demand? Inelastic demand?

---

Definitions:

Money Supply Curve

A graphical representation showing the relationship between the quantity of money in the economy and the level of prices.

Inverse Relationship

A situation where two variables move in opposite directions, meaning when one variable increases, the other decreases, and vice versa.

Alban William Phillips

Alban William Phillips was a New Zealand economist best known for the Phillips Curve, which suggests a historical inverse relationship between rates of unemployment and corresponding rates of inflation.

Phillips Curve

An economic theory suggesting an inverse relationship between rates of unemployment and corresponding rates of inflation, indicating trade-offs between these two economic variables.