Think of a good or service with which you are familiar and for which there has been a recent change in quantity demanded because of a change (up or down) in price.

What is the good or service?

What is your best estimate of the original quantity demanded? New quantity demanded? (please explain your units carefully.) You don’t need to do research: these numbers can be a best “guess.”

What is your best estimate of the original price? New price? (please explain your units carefully.)

What is price elasticity of demand for this good or service? Please show your work.

How does this elasticity compare with others listed in the textbook?

Expert Solution

1. The good or service that can be considered in this case is Smartphones. Fall in the prices of Smartphones for the past few years has led to increase in the quantity demanded of Smartphones.

2. The original quantity demanded was 20 million and the new quantity demanded is 30 millon.

3. Original prices were cloase to $700 initially and now it has fallen to $528.

4. The price elasticity of demand = Percentage change in quantity demanded/ Percentage change in price = 50 / -24.5 = -2.04.

5. The above figure show that demand of the good is elastic.

Rahul Sunny answered 1 year ago

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Question

Think of a good or service with which you are familiar and for which there has been a recent change in quantity demanded because of a change (up or down) in price.

Solutions

Expert Solution

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