Elasticity of Paint
Elasticity of Paint
Kirsten Bradley
American InterContinental University
Microeconomics- ECON220
August 9th 2011
Elasticity of Paint
I am a local painter dealing with the rise in paint cost. Paint previously cost three dollars per gallon and I used thirty-five gallons of paint per week. The cost of paint rose to three-and-a-half dollars per gallon. Accordingly, my usage of paint dropped to twenty gallons a week.
As a result of the price increase, the price of elasticity demand has changed as well. To calculate the price of elasticity of demand one must divide the percentage of change in quantity demanded by the percentage of change in price. Before I am able to determine the price of elasticity of demand I must first calculate the percentage of change in quantity demanded followed by the percentage of change in price. This can be shown in example 1.
Example 1:
Price of Elasticity of Demand = (Percentage change in quantity demanded / Percentage change in price)
First, I will compute the percentage of change in quantity demanded. To do this I must divide the quantity demanded by the initial quantity demanded. I then take this quotient and multiply it by 100 to get the percentage of change in quantity demanded. For the paint I use, the change in quantity demanded is fifteen then to be divided by the initial quantity demanded and the total to be multiplied by one-hundred. This percentage of change in quantity demanded for paint is 42.86%. This equation is expressed in Example 2.
Example 2:
Percentage of Change in Quantity demanded = (Change in quantity demanded / Initial quantity demanded) * 100
Percentage of Change in Quantity demanded = (15 / 35) * 100
Percentage of Change in Quantity demanded = (.4286) * 100
Percentage of Change in Quantity demanded = 42.86% Secondly, I will calculate the percentage of change in price. To do this I first must divide the change in price by the initial price and then multiply the total by one-hundred. For my paint,
Kirsten Bradley
American InterContinental University
Microeconomics- ECON220
August 9th 2011
Elasticity of Paint
I am a local painter dealing with the rise in paint cost. Paint previously cost three dollars per gallon and I used thirty-five gallons of paint per week. The cost of paint rose to three-and-a-half dollars per gallon. Accordingly, my usage of paint dropped to twenty gallons a week.
As a result of the price increase, the price of elasticity demand has changed as well. To calculate the price of elasticity of demand one must divide the percentage of change in quantity demanded by the percentage of change in price. Before I am able to determine the price of elasticity of demand I must first calculate the percentage of change in quantity demanded followed by the percentage of change in price. This can be shown in example 1.
Example 1:
Price of Elasticity of Demand = (Percentage change in quantity demanded / Percentage change in price)
First, I will compute the percentage of change in quantity demanded. To do this I must divide the quantity demanded by the initial quantity demanded. I then take this quotient and multiply it by 100 to get the percentage of change in quantity demanded. For the paint I use, the change in quantity demanded is fifteen then to be divided by the initial quantity demanded and the total to be multiplied by one-hundred. This percentage of change in quantity demanded for paint is 42.86%. This equation is expressed in Example 2.
Example 2:
Percentage of Change in Quantity demanded = (Change in quantity demanded / Initial quantity demanded) * 100
Percentage of Change in Quantity demanded = (15 / 35) * 100
Percentage of Change in Quantity demanded = (.4286) * 100
Percentage of Change in Quantity demanded = 42.86% Secondly, I will calculate the percentage of change in price. To do this I first must divide the change in price by the initial price and then multiply the total by one-hundred. For my paint,