$1.20 P (S/slice (slices per day) 9. The absolute value of the slope of this demand curve is 1/3, so plugging in the P and Q values at point A into the formula elasticity =(1/slope )P/Q, we have elasticit at a=3(4/6)=2. A one percent price increase will thus translate into a two percent decrease in the quantity demanded. Total expenditure, which was PQ, will thus now be(1.01P)x(98Q), which is approximately equal to 99Q. So total expend iture will decline by about one percent 10. What government officials failed to take into account was that people dont demand electricity for its own sake, but rather as a means to accomplish other ends such as producing cooler air for their homes. By requiring people to buy more efficient air conditioners, the government effectively reduced the price of buying cooler air. If the demand for cool air is sufficiently elastic with respect to its price people may buy enough more of it than before that they end up using more electricit$1.20. S Q (slices per day) P ($/slice) 9. The absolute value of the slope of this demand curve is 1/3, so plugging in the P and Q values at point A into the formula elasticity = (1/slope)P/Q, we have elasticity at A = 3(4/6) = 2. A one percent price increase will thus translate into a two percent decrease in the quantity demanded. Total expenditure, which was PQ, will thus now be (1.01P)x(.98Q), which is approximately equal to .99Q. So total expenditure will decline by about one percent. 10. What government officials failed to take into account was that people don’t demand electricity for its own sake, but rather as a means to accomplish other ends, such as producing cooler air for their homes. By requiring people to buy more efficient air conditioners, the government effectively reduced the price of buying cooler air. If the demand for cool air is sufficiently elastic with respect to its price, people may buy enough more of it than before that they end up using more electricity