Determining the Elasticity of Demand: Practice Essay Example

the demand for paint is elastic, unitary elastic, or inelastic. Based on the definitions above, it seems that the supply and demand of the paint varies significantly due to the price raising from $3. 00 to $3. 50 a gallon.

So the demand for paint is Elastic. Explain your reasoning and interpret your results. The demand for paint is elastic because when the price of the paint increased, it changed the quantity of the paint demanded. When the results were interpreted, it seems that the quantity demanded went down because the PeD coefficient in a change of the price went up. So there is an immediate response to the change in quantity, causing revenues to go down.

References:

1. Elastic Definition. (2012). Retrieved February 13, 2012, from Investopedia ULC: http://www. nvestopedia. com/terms/e/elastic. asp#axzz1mCXH0ucW Inelastic Definition. (2012).
2. Retrieved February 13, 2012, from Investopedia: http://www. investopedia. com/search/default. aspx? q=inelastic#axzz1mCXH0ucW Microeconomics- Price Elasticity of Demand. (2012).
3. Retrieved February 13, 2012, from tutor2u. net: http://tutor2u. net/economics/revision-notes/as-markets-price-elasticity-of-demand. html Unitary Elasticity. (2012).
4. Retrieved February 13, 2012, from BusinessDictionary. com: http://www. businessdictionary. com/definition/unitary-elasticity. html