Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a month. Perform the following:
1. Compute the price elasticity of demand for paint and show your calculations.
2. Decide whether the demand for paint is elastic, unitary elastic, or inelastic.
3. Explain your reasoning and interpret your results.
For assistance with your assignment, please use your text, Web resources, and all course materials:
- Microeconomics: Consumers and Firms
- Supply, Demand, Equilibrium, Elasticity
- Price Elasticity & Microeconomics
The assignment in economics deals with microeconomics. Price elasticity of demand is discussed in particular. A scenario of a painter who uses lesser amount of paint due to price rise has been discussed and calculated.
Total word count is 803.