4. PRICE/UNIT ($)QUANTITY 10 1000 20700 30 500 40 250 A DEMAND SCHEDULE FOR ABC DETERGENT

5. The Method to find out the elasticity of demand for ABC detergent if the price increases from $20 to $30: 1/. The original price method (500-700) / (30-20) X 20/700 Ed = -|0.57| (Corr. 2 s.f) 2/. The average price and quantity method (500-700) (30+20) / 2 ------------ X ----------------- (30-20) (500+700) /2 Ed = -|0.83|(Corr. 2 s.f)

6. Since Ed< 1, therefore the elasticity of demand for ABC detergent is INELASTIC. DIFFERENT TYPES OF PRICE ELASTICITY: Elastic : Ed > 1 Inelastic : Ed < 1 Unitarily elastic : Ed = 1 Perfectly inelastic : Ed = 0 Perfectly elastic: Ed = infinitive

7. Price $ Qd/period P1 P2 -Inelastic demand -If price increase, =>% Increase in price > % decrease in Qd -Gain > Loss -Total Revenue increase GAIN LOSS