Question for the economics experts

Discussion in 'Off Topic [BG]' started by LiquidMidnight, Jan 29, 2005.

  1. LiquidMidnight


    Dec 25, 2000
    Hey all, this isn't a "do my homework" thread. I was just wondering if someone could tell me if I'm going in the right direction. We are cacluating elasticity coefficients for supply/demand and I really have no way of verifying if I'm doing this right. Could someone tell me if I got the right answer here?

    The price fell from 5.00 to 4.50
    Demand increased from 60 to 80.

    The answer I got was -2 (I know that intergers generally aren't counted in economics, I just posted that so everyone knew the exact answer)
  2. Against Will

    Against Will Supporting Member

    Dec 10, 2003
    Big Sound Central
    The math seems good to me, the negative threw me off a little but I haven't done elasticity coefficients for at least 3 years.
  3. Brad Barker

    Brad Barker Supporting Member

    Apr 13, 2001
    berkeley, ca
    the formula is:

    (change in quantity demanded/avg. quantity demanded)/(change in price/avg. price)


    it's been a year, but i think this is the right formula. don't remember if you have to take absolute values...

    umm...can ya look the formula up in the textbook? if not, i'm sure there are econ class helper-dealies (the official term) on the internet. ...that aren't the off topic section of talkbass...
  4. LiquidMidnight


    Dec 25, 2000
    Hey guys, thanks.

    Brad, believe me - I've searched the net and really couldn't come up with I wanted. *LOL*
  5. Brad Barker

    Brad Barker Supporting Member

    Apr 13, 2001
    berkeley, ca

    just so ya know, i've been getting an answer of -2.7 with those numbers.

    and...i'm really thinking that you take absolute values of the changes.

    i remember that a perfectly inelastic good has an elasticity of 0, whereas a perfectly elastic good has an elasticity of infinity. (maybe i got it bass-ackwards.)

    so...negative numbers really aren't even in the domain of elasticity coefficients. :meh:

    ...look in the textbook? man, i wish you had asked me this last year. :spit: