MICROECONOMICS
Assignment: Problem Set – Elasticity
Name: __________________________________________ Date: ___________________
Year and Section: _______________________ Score: __________________
GENERAL INSTRUCTIONS: Answer the given problem sets in a yellow pad paper. Double
underline your final answer.
Use the following information to answer questions 1 to 7:
Puregold Boac puts pancit canton on sale which reduces its price from ₱10.90 per item
to ₱9.90 per item, the quantity sold increases from 220 per week to 230 per week.
1. This illustrates what type of elasticity?
2. What formula is used to determine the percentage change in quantity demanded?
3. What is the percentage change in quantity demanded for the pancit canton described
above?
4. What formula is used to determine the percentage change in price?
5. Calculate the percentage change in price for the cereal.
6. Finally, using the whole formula, calculate the value of the price elasticity of demand
for pancit canton.
7. Explain what this result means in words.
Use the following information to answer questions 8 and 9:
Suppose that Puregold Boac decreases the price of laundry detergent from ₱105 to ₱99.
As a result, quantity demanded increases from 110 to 130.
8. Calculate the percentage change in price.
9. Calculate the price elasticity of demand. You answer should be expressed in absolute
value terms.
10. Based on your answer, the demand curve would be classified as (select one):
a. inelastic
b. elastic
c. unit elastic
Use the following information to answer questions 11 to 12:
Consider the following demand schedule for tote bags.
Price Quantity Demanded
₱5 385
₱10 365
₱15 345
₱20 325
₱25 305
₱30 285
₱35 265
₱40 245
11. Suppose that a store increases the price of tote bags from ₱30 to ₱35. Calculate the
price elasticity of demand.
12. Suppose that a store increases the price of tote bags from ₱25 to ₱30. Based on this
information, the demand curve would be classified as (select one):
a. inelastic
b. elastic
c. unit elastic
13. Suppose that when the price of laundry detergent decreases from ₱50 to ₱40, quantity
supplied decreases from 260 to 180. Calculate the price elasticity of supply.
14. Consider the following supply schedule for tote bags.
Price Quantity Demanded
₱5 425
₱10 445
₱15 465
₱20 485
₱25 505
₱30 525
₱35 545
₱40 565
Suppose that the price of tote bags increases from ₱10 to ₱15. Calculate the price
elasticity of supply.
15. Suppose that when income increases from ₱13,333 to ₱24,000, quantity demanded
changes from 210 to 270. Calculate income elasticity.
16. Suppose that the income increases from ₱13,333 to ₱24,000. As a result quantity
demanded changes from 210 to 270.
Based on this information you can tell that this product is (select one):
a. a complement
b. normal
c. a substitute
d. inferior
17. Suppose that the price of one product increases from ₱199 to ₱550. As a result,
quantity demanded for another product changes from 280 to 180.
Based on this information you can tell that these two products are (select one):
a. complements
b. normal
c. substitutes
d. inferior
18. Suppose that when the store increases the price of bath soap from ₱30.50 to ₱31.90,
quantity demanded decreased from 210 to 130.
What is the change in total revenue as a result of this price change? Make sure to
include a negative sign in your answer, if necessary.
19. Based on your answer in Question 18, is the product elastic or inelastic?
20. Suppose that you know that the price elasticity of demand is 1.4. If we increase the
price of this product, then the total revenue will (select one):
a. increase
b. remain unchanged
c. decrease
*nothing follows*
Prepared by:
(s.g.d.)
HIDE YASU Y. NAKAJIMA
Subject Instructor
