1.

Calculate own price elasticity

Price of Quantity of Own Price

Software Sofware Sold Elasticity
Px Qx
A 0 80 -
B 5 70 (0.14)
C 10 60 (0.33)
D 15 50 (0.60)
E 20 40 (1.00)
F 25 30 (1.67)
G 30 20 (3.00)
H 35 10 (7.00)
I 40 0 -

Own price elasticity= %change in quantity demanded

% change in Price
= (-10/70)
(5/5)
= -14%
100%
= -0.14

2. Calculate Arc elasticity

Quantity Price
Q1 343,000 160,800 P1
Q2 335,000 164,000 P2

Arc Elasticity= Change in Quantity * (P1+P2)/2

Change in Price * (Q1+Q2)/2
= (343,000-335,000) * (160,800+164,000)/2
(160,800-164,000) * (343,000 + 335,000)/2
= 1,299,200,000
(1,084,800,000)
= -1.20

3. Calculate point cross-price elasticity

Original New
 Quantity Price Quantity
Good X 50 30
Good Y 30 10 60

Point cross-price elasticity = % change in quantity demanded of one good

% change in price of related good
= -20/50
5/10
= -0.4
0.5
= -0.80

Arc cross-price elasticity= % change in quantity demanded of one good * (P1+P2)/2

change in price of related good * (Q1+Q2)/2
= (-20/50) * (10+15)/2
(5/10) * (50+30)/2
= (5)
20
= -0.25 Complement good
Good X is inelastic

Original New
Quantity Price Quantity
Good X 50 70
Good Y 30 10 60

Point cross-price elasticity = % change in quantity demanded of one good

% change in price of related good
= 20/50
5/10
= 0.4
1
= 0.80

Arc cross-price elasticity= % change in quantity demanded of one good * (P1+P2)/2

change in price of related good * (Q1+Q2)/2
= (20/50) * (10+15)/2
(5/10) * (50+70)/2
= 5
30
= 0.17 Substitute good
Good X is elastic
 Total Revenue
Px * Qx
0 Inelastic
350 ### Inelastic
600 ### Inelastic
750 ### Inelastic
800 ### Unitary Elasticity
750 ### elastic
600 ### elastic
350 ### elastic
0 ### elastic

800+164,000)/2
000 + 335,000)/2
 Price

15

nge in quantity demanded of one good

% change in price of related good

Complement good
Good X is inelastic

antity demanded of one good * (P1+P2)/2

e in price of related good * (Q1+Q2)/2

Price

15

nge in quantity demanded of one good

% change in price of related good

Substitute good
Good X is elastic

antity demanded of one good * (P1+P2)/2

e in price of related good * (Q1+Q2)/2