The price elasticity of demand when the price increases from $18 to $20 is - 1.37
<h3>How to calculate the price elasticity?</h3>
The price elasticity of demand is the ratio of the percentage change in quantity demanded to the percentage change in price for a product. Economists use it to understand how supply and demand fluctuate as the price of a product varies
Price elasticity of demand = % change in QD / % change in Price
Where,
% change in QD = (Q2 – Q1) / [(Q2 + Q1) / 2]
= (20 – 24) / [(20 + 24) / 2]
= -0.181
Percentage change in Price = (P2 – P1) / [(P2 + P1) / 2]
= (16 – 14) / [(16 + 14) / 2]
= 0.1333
Therefore, the price elasticity will be:
= 0.181 / 0.133
= -1.37
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