ib-economics-quantitative

E.g.In the diagram below, price is $5.00 and quantity demanded is 40,000 eggs. Pricerises to $5.50 and the quantity demanded falls to 32,000.Step 2Follow Steps 1 and 2 in the section above, “Calculating PED”.Now you have a go!Question 2.1Calculate the PED for the following changes:a. If the price of a good increases by 16% and the quantity demanded falls by 10%.b. If price increases from $7.00 to $7.70 and quantity demanded falls from 75 units to60 units.c. If price falls from $6.50 to $5.20 and quantity demanded increases from 1,200 to1,260 units.Question 2.2Answer the following questions by using the formula for PED:a. If the value of PED is 0.75 and the price of the product increases by 12%, what willthe percentage fall in quantity demanded be?b. If the value of PED is 1.25 and quantity demanded rises by 20%, when the price of agood is lowered, what was the percentage fall in the price of the good?Question 2.3Again, use the formula for PED, but also remember that total revenue is calculated bymultiplying the quantity demanded by the price of the good.a. A businesswoman is selling 400 units of her good per week at a price of $300 perunit. The PED for the good is 1.6. She decides to lower the price of the good by$15. What will be the effect of her decision to lower prices on her total revenue fromsales?b. A producer is making $400 per week selling a product at $20. The producer lowersthe price of the good by $3 and sells 4 more units of the product. What is the PED ofthe product? What is the change in total revenue received from sales of the product?Produced by Ian Dorton & Jocelyn Blink Page 12