Help For Your Introductory Economics Course

Price elasticity of demand is one of the most difficult concepts in microeconomics making this week feel more challenging than usual for many students.  Here are some resources to help you navigate week 3: Check this video out for an explanation of the 3 rd discussion to help avoid the commonly made mistakes! Other helpful resources on price elasticity of demand. Price Elasticity of Demand Video Price Elasticity of Gasoline Example Elasticity of Demand Explained Khan Academy Videos on Price Elasticity of Demand Mr. Clifford’s Explanation of PED and TR Test Helpful resources for Homework 3: Sample Problem: Substitutes Price Elasticity of Demand Sample Problems Thinking ahead to milestone two…this is a big assignment and it will serve you well if you can get an early start on it: Milestone Two Tips to Get Started with Writing About Demand Milestone Two Tips to Get Started with Writing About Supply Milestone Two Tips: How to Write an Exemplary Section on Supply and Demand (Example I...

Price Elasticity of Demand Sample Problem #1: When Hank’s Hamburger Stand priced its signature burger at $7, they sold 500 burgers per week. When they raised the price to $8, they sold 450 burgers per week. Based on this information, calculate the price elasticity of demand for hamburgers. The price elasticity of demand = percentage change in quantity demanded / percentage change in price Start by calculating the % change in quantity demanded = change in quantity / (sum of quantities / 2), and then multiply 100 to put in % form % change in quantity demanded = (500 – 450) / ((500 + 450) /2) = 50 / (950 / 2) = 50 / 475 = .1053 .1053 X 100 = 10.53% is the change in quantity demanded Next calculate the percentage change in price = change in price / (sum of prices / 2), then multiply by 100 to put it in % form (7 – 8) / ((7 + 8)/2) = -1 / (15/2) = -1/7.5 = -.1333 -.1333 X 100 = -13.33% is the change in price Finally, calculate the elasticity of demand. The price elasticity of demand = perce...

All of the following pairs of goods are substitutes except -We observe the price of soda decreases and the demand for iced tea decreases. -We observe the price of steak increases and the demand for chicken increases. -We observe the price of bicycles increases and the demand for helmets decreases. To find the answer to this question, we must first know that two goods are substitutes when a change in the price of one causes a shift in demand for the other in the same direction as the price change. When the price of soda decreases the demand for iced tea decreases. These goods are substitutes because the demand for ice tea is moving in the same direction (decreasing) as the price of soda. Intuitively this makes sense because you’ll choose to drink one or the other with your meal – probably not both! When the price of steak increases the demand for chicken increases. Again, these goods are substitutes because the demand for chicken is moving in the same direction (increasing) as the price...