Refer to the Accompanying Table A Calculate the Price Elasticity of Demand When the Price

question 109

Essay

Refer to the accompanying table. $$\begin{array} { | l | c | c | } \hline \text { Price } & \begin{array} { l } \text { Quantity of } \\\text { Televisions } ( \mathbf { Y } \\= \mathbf { 2 0 , 0 0 0 } )\end{array} & \begin{array} { l } \text { Quantity of } \\\text { Televisions } ( \mathbf { Y } \\\mathbf { = 3 0 , 0 0 0 0 ) }\end{array} \\\hline \$ 350 & 250 & 375 \\\hline \$ 450 & 200 & 325 \\\hline \$ 550 & 150 & 275 \\\hline \$ 650 & 100 & 225 \\\hline \$ 750 & 50 & 175 \\\hline\end{array}$$
a. Calculate the price elasticity of demand when the price rises from $450 to $550 for an individual income of $20,000.
b. Is demand elastic or inelastic? Explain your answer to the elasticity of demand you calculated in part (a) and include the mathematical equation used to find it.

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Definitions:

Treasury Stock

Refers to shares that were issued and later repurchased by the corporation, reducing the amount of outstanding stock on the open market.

Issue Price

The price at which a company's securities (like stocks or bonds) are made available for sale when they are first issued to the public.

Treasury Stock

Shares that were once available for sale and have been bought back by the issuing company; these shares do not pay dividends or have voting rights.

Balance Sheet

A financial statement that showcases an organization's assets, liabilities, and shareholders' equity at a specific point in time.