Elasticity Worsheet
1.
Mr. Lane has increased the price of CDs in his music shop by
15%, and the Qd has dropped by 5%. What
is the elasticity of demand of the CDs?
Are the CDs elastic or inelastic?
Show your work!!
2.
Snoopy's hot dogs have dropped their prices from $2.00 per dog
to $1.50. The number of hot dogs
purchased last week then increased from 1,500 to 2,300. What is the elasticity of the hot dogs? Are they elastic or inelastic? Show
your work!!
Step 1: Find the % change of price and Qd (remember: to find % change, divide the amount of
change by the original amount)
Step 2: Use the % change in Qd as the numerator and the % change in price as the denominator.
¨ Numerator is larger = elastic demand
¨ Denominator is larger = inelastic demand
Step 3: To find the exact elasticity, you must divide the numerator by the denominator. The answer
is the exact elasticity.
Answer #2 below using Steps 1-3:
Step 1:
Step 2:
Step 3: