Question 1:
A local cinema increased its ticket price from ZMW 50 to ZMW 60. As a result, the number of
tickets sold per week decreased from 500 to 400. Calculate the price elasticity of demand using
the midpoint formula.
Formula (Midpoint): PED=(P1+P2)/2P2−P1(Q1+Q2)/2Q2−Q1
Where: Q1 = Initial Quantity Q2 = New Quantity P1 = Initial Price P2 = New Price
Question 2:
The quantity of apples demanded increases by 8% when consumer income rises by 4%.
Calculate the income elasticity of demand for apples.
Formula: IED=% Change in Income% Change in Quantity Demanded
Question 3:
The price of coffee beans increases by 15%, leading to a 5% decrease in the quantity demanded
of coffee grinders. Calculate the cross-price elasticity of demand between coffee beans and
coffee grinders.
Formula: CPEDGrinders,Beans
=% Change in Price of Coffee Beans% Change in Quantity Demanded of Coffee Grinders
Question 4:
A bookstore finds that when it reduces the price of novels by 20%, the quantity of novels sold
increases by 30%. Calculate the price elasticity of demand for novels.
Formula: PED=% Change in Price% Change in Quantity Demanded
Question 5:
The income elasticity of demand for a certain type of instant noodles is -0.6. If consumer income
decreases by 10%, what will be the percentage change in the quantity demanded of these
noodles?
Formula (rearranged): % Change in Quantity Demanded=IED×% Change in Income