Answer:
0.15
Inelastic
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price
Midpoint change in quantity demanded = change in quantity demanded / average of both demands
change in quantity demanded = 14 million - 15 million = -1 million
average of both demands = (14 million + 15 million ) / 2 = 14.50 million
Midpoint change in quantity demanded = -1 million / 14.50 million = -0.069
midpoint change in price = change in price / average of both price
change in price = $2.15 - $1.35 = $0.80
average of both prices = ( $2.15 + $1.35 ) / 2 = $1.75
midpoint change in price = $0.80 / $1.75 = 0.457
-0.069 / 0.457 = 0.15 demand is inelastic
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases
Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.
