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Ad libitum [116K]
4 years ago
12

When the price of oranges increases from $4 to $6 per bag, the quantity demanded of oranges decreases from 800 bags to 700 bags.

The price elasticity of demand over this price range is equal to ------
Business
1 answer:
bagirrra123 [75]4 years ago
7 0

Answer:

0.37, the demand is inelastic.

Explanation:

% change in price = $6- $2 = ($2 / $6) * 100 = 33%

% change in demanda =  800 - 700 = (100/800) * 100 = 12.5%

PED = 12.5 / 33 = 0.37.

The formula to calculate the PED is %change in demand / %change in price, and if we apply the formula according to the information provided, we found that the PED is 0.37. If the PED is between 0 and 1, we can conclude that we have an inelastic demand.

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