TOPIC 6: DEMAND ANALYSIS

A.Calculate own price elasticity/point elasticity and identify if inelastic, elastic or unitary elastic.

Quantity of Own Price Total

Price of Software Sofware Sold Elasticity Revenue
Px Qx Px * Qx
A 0 850 0
B 100 750 75,000
C 200 650 130,000
D 300 550 165,000
E 400 450 180,000
F 500 350 175,000
G 600 250 150,000
H 700 150 105,000
I 800 0 0

4 Point Elasticity F to G -0.29

0.20
-1.43 elastic

5 Point Elasticity G to H -0.40

0.17
-2.40 elastic
6 Point Elasticity H to I -1.0
0.1
-7.0 elastic
B. Calculate Arc elasticity and identify if inelastic, elastic or unitary elastic.

1 Quantity Price
Q1 343,000 160,800 P1
Q2 335,000 164,000 P2

2 Quantity Price
Q1 100,000 15,000 P1
Q2 80,000 18,000 P2

3 Quantity Price
Q1 15,000 25 P1
Q2 13,000 38 P2

4 Quantity Price
Q1 45,000 250 P1
Q2 42,000 225 P2

5 Quantity Price
Q1 100,000 50 P1
Q2 110,000 60 P2

6 Quantity Price
Q1 300,000 6 P1
Q2 320,000 5 P2
C. Calculate point cross-price elasticity and identify if goods are substitutes or complements.

1 Original New
Quantity Price Quantity Price
Good X 50 30
Good Y 30 10 60 15

= #DIV/0! complement

2 Original New
Quantity Price Quantity Price
Good X 1,000 950
Good Y 1,200 300 1,400 380

3 Original New
Quantity Price Quantity Price
Good X 150,000 148,000
Good Y 130,000 90 132,000 91

4 Original New
Quantity Price Quantity Price
Good X 60 70
Good Y 50 20 55 25

5 Original New
Quantity Price Quantity Price
Good X 1,000 1,200
Good Y 1,500 15 1,400 20

6 Original New
Quantity Price Quantity Price
Good X 20,000 25,000
Good Y 18,000 6 20,000 7