Instruction

1

Calculate the coefficient of elasticity of demand under the income according to the formula: E=(ΔQ/Q1)/(ΔI/I1) where: Q - volume of purchased goods;- I - the income of the consumer.To calculate determine the change in consumer demand for this type of product, provided that the price will be the same. Suppose over the month the store had purchased mobile phones in the amount of 200 thousand rubles., next month - 210 thousand rubles. Prices on the phones remained the same.

2

Calculate the percentage change in quantity demanded for mobile phones: (210-200)/200*100%=5% - the demand for mobile phones for the month increased by 5%.

3

Calculate the percentage change in income of buyers. Dynamics of incomes of the population was defined according to the statistics in your area. For example, for the month the average wages of the population has changed from 21 000 to 22 000 R. R. Calculate the percentage change in average income over the period: (22 000-21 000)/21 000*100%=4,8%, that is, the income of the population increased on average by 4.8%.

4

Calculate the elasticity of demand for mobile phones according to the formula given in paragraph 1. The coefficient of elasticity of demand for mobile phones income is equal to: E = 5%/4,8% = 1,04. This figure means that if you change income of consumer 1%, the demand for this category of product will change by 1.04%.

5

Calculate the coefficient of elasticity of demand at a price according to the formula: E=(ΔQ/Q1)/(DR/P1) where: Q - volume of purchased goods;- R - the price of the goods.For example, calculate the elasticity of demand on the price of mobile phones. Determine the change in consumer demand for this type of product. For example, the demand for them has increased by 5% (p. 2). Average price per phone sold has increased from 8 000 to 8 300 rubles.

6

Calculate the percentage change in the average price of sold phones: (8 300-8 000)/8 000*100%=3,8%. Consequently, the average price of sold phone for the month rose 3.8%.

7

Calculate the elasticity of demand for mobile phones according to the formula given in paragraph 5. The coefficient of elasticity of demand for mobile phones at a price equal to: E = 5%/3,8% = 1,32. This figure means that if you change mobile phones by 1%, the demand for this type of product will change to 1.32%.

Note

If the calculated coefficient of elasticity of price demand for this type of product is less than one, such goods are considered inelastic (e.g., necessities). If the coefficient of elasticity is greater than one, these products are elastic (furniture, appliances).