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lidiya [134]
3 years ago
15

a. Using the starting point formula, what is the price elasticity of demand for going from a price of $160 per unit to a price o

f $140 per unit
Business
1 answer:
ki77a [65]3 years ago
8 0

Answer:

Price Elasticity of Demand is -4

Explanation:

We can see the graph and easily calculate the Q1 which is 120 units at P1 $140 and Q2 which is 80 units at P2 $160 price.

The starting point formula for calculating price elasticity of demand is given as under:

Price Elasticity of Demand = (ΔQ / Q2)  /  (ΔP / P2)

Here

ΔQ = Q1 - Q2 = 120 - 80 = 40 units

ΔP = P1  -  P2 = 140 - 160 =   - $20

By putting value in the above equation, we have:

Price Elasticity of Demand = (40 Units / 80 Units)  /  (-$20 / $160)

Price Elasticity of Demand = -4

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