STEVENS INSTITUTE OF TECHNOLOGY
SCHOOL OF BUSINESS
BT 244-A: MICROECONOMICS HOMEWORK
(Elasticity of Demand and Supply)
Please answer all the questions below. You must show your calculations in detail to get full
credit. All graphs and tables should be self-explanatory and labeled properly. You are free to
discuss with your peers but you must submit your own work with your own words. Remember,
no late submissions will be accepted. “Learn economics not for a better grade, but for a better
living…”
Good luck!
1) Label demand as elastic, unit elastic, or inelastic for each
scenario given below. Use the midpoint method when
applicable to calculate the price elasticity of demand. Please
give de reasoning of your answer.
a) Contain Yourself!, a plastic container company, raises the
price of its signature Lunchbox container from $3.00 to
$4.00. As a result, the quantity sold drops from 20,000 to
15,000.
b) Economists working for the United States have determined
that the elasticity of demand for gasoline is 0.5.
c) Capital Metro decides to increase bus fare rates from $2.00
to $2.21. Consequently, the number of passengers who
decide to take the bus in Austin drops from an average of
70,000 riders a day to an average of 61,000 riders a day.
2) The accompanying diagram depicts a demand curve for
DVDs for a monopoly currently producing at point 𝐵. Specify
answers to the nearest dollar, and use a negative sign to
indicate decreases in revenue. Your should show your work.
,
SCHOOL OF BUSINESS
BT 244-A: MICROECONOMICS HOMEWORK
(Elasticity of Demand and Supply)
Please answer all the questions below. You must show your calculations in detail to get full
credit. All graphs and tables should be self-explanatory and labeled properly. You are free to
discuss with your peers but you must submit your own work with your own words. Remember,
no late submissions will be accepted. “Learn economics not for a better grade, but for a better
living…”
Good luck!
1) Label demand as elastic, unit elastic, or inelastic for each
scenario given below. Use the midpoint method when
applicable to calculate the price elasticity of demand. Please
give de reasoning of your answer.
a) Contain Yourself!, a plastic container company, raises the
price of its signature Lunchbox container from $3.00 to
$4.00. As a result, the quantity sold drops from 20,000 to
15,000.
b) Economists working for the United States have determined
that the elasticity of demand for gasoline is 0.5.
c) Capital Metro decides to increase bus fare rates from $2.00
to $2.21. Consequently, the number of passengers who
decide to take the bus in Austin drops from an average of
70,000 riders a day to an average of 61,000 riders a day.
2) The accompanying diagram depicts a demand curve for
DVDs for a monopoly currently producing at point 𝐵. Specify
answers to the nearest dollar, and use a negative sign to
indicate decreases in revenue. Your should show your work.
,
