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:

Above-Equilibrium

A situation where the price of a good or service is higher than the equilibrium price, leading to a surplus.

Private Businesses

Enterprises owned, controlled, and operated by private individuals or entities, aiming to generate profits.

Union Representation

The act of a labor union standing in for its members to negotiate employment terms, such as wages and working conditions, with employers.

Compensating Differentials

Wage differences across jobs that reflect the desirable or undesirable aspects of each job, equalizing the overall desirability of different positions.