Question

Sandy's sandwich sitdownsandy's sandwich sitdown priced its lunch treatslunch treats at ​$2.002.00​, they sold 250250 per week. when the price was ​$3.003.00​, they sold 200200 per week. based on this​ information, the absolute value of the price elasticity of demand for lunch treatslunch treats is

Answer 1

To calculate the absolute price elasticity in this case, the expression is the quantity demanded change divided by the change in the price, both expressed as percentages. For the sandwiches, the demand dropped by (50/250), or 20% (0.20), while the price increased by (1.00/2.00), or 50% (0.50). The expression, then, would be (0.20/0.50), or a price elasticity of demand of 0.40.