Hi there,

I'm studying Elasticity of Demand in Microeconomics. My homework questions are below, but I'm really struggling to understand how exactly to calculate the answer for #2. I'm also not certain my calculations are correct for #1. Any help on explaining the equations for each and working through to the answer would be super helpful.

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Observation Price Quantity

A $4.00 16

B $6.00 10

1. Calculate a price elasticity of demand.You must show all your work to earn credit.

Formula:Ed = | [(Qd1 -Qd2) / {(Qd1+Qd2) / 2}] / [(P1 -P2) / {(P1+P2) / 2}]|

Ed = |[(16-10) / {[16+10) / 2}] / [(4-6) / {(4+6) / 2}]|

Ed = |[ 6 / {[26 / 2]} / [ -2 / {10 / 2 }]|

Ed = |[6 / 13] / { -2 / 5}]|

Ed = -15/13

Ed= -1.15

2. Given the elasticity of demand, a 10% increase in price will cause quantity demanded to fall by what percentage?Explain your answer.