Question

What is the price elasticity of the demand for skateboards, when A shop owner wants to know what the effect would be of increasing the price on skate boards he sells in his store. When skate boards cost $200, 10 people are willing to buy those skate boards. If the price increases to $300, only 7 people are willing to buy them. ?

Answer 1

Answer: The price elasticity of the demand for skateboards = 0.6.

Step-by-step explanation:

Since we have given that

Original price of skate boards = $200

Quantity of skate board = 10

New price of skate boards = $300

Quantity of skate board = 7

Since we know that "Price of commodity is inversely related to quantity demanded."

So, price elasticity of demand is given by

$e_d=\frac{\Delta q}{\Delta p}\times \frac{P}{Q}\\\\e_d=\frac{10-7}{300-200}\times \frac{200}{10}\\\\e_d=\frac{3}{100}\times 20\\\\e_d=\frac{3}{5}=0.6$

Hence, the price elasticity of the demand for skateboards = 0.6.