Suppose that during the past year, the price of a laptop computer fell from $2,100 to $1,820

Other things being equal, the demand for natural gas will tend to be …………..( less or more

or no more,nor less) elastic in the short run than in the long run.

2. Calculating the price elasticity of demand - A step-by-step guide

Suppose that during the past year, the price of a laptop computer fell from $2,100 to $1,820. During

the same time period, consumer sales increased from 429,000 to 530,000 laptops.

Calculate the elasticity of demand between these two price–quantity combinations by using the

following steps. After each step, complete the relevant part of the table with the appropriate answers.

(Note: For decreases in price or quantity, enter values in the Change column with a minus sign.)

….. (474.75% or 10.53%

or 21.06% )

( -7.14% or -700% 0 -

14.29%)

Step 1: Fill in the appropriate values for original quantity, new quantity, original price, and new price.

Step 2: Calculate the average quantity by adding the original quantity and the new quantity, and

then dividing by two. Do the same for the average price.

Step 3: Calculate the change in quantity by subtracting the original quantity from the new quantity.

Do the same for the change in price.

Step 4: Calculate the percentage change in quantity demanded by dividing the change in quantity by

the average quantity. Do the same to calculate the percentage change in price.

Step 5: Calculate the price elasticity of demand by dividing the percentage change in quantity

demanded by the percentage change in price, ignoring the negative sign.

Using the midpoint method, the elasticity of demand for laptops is about …… ( 0.68 or 0.74

or 1.47 or 2.95) .