The price of milk at the local grocery store is cut by 15%. In response to the price cut, the quantity of milk demanded falls by

Question

2 years ago

14

5%. The absolute value of the price elasticity of demand for milk is _____, and the price elasticity of demand is

1 answer:

Crank · Answer 1 · 2022-07-01T16:06:55+03:00

Answer:

the absolute value is -0.33 and it is inelastic

Explanation:

The computation is shown below:

The Absolute value of Price Elasticity of Demand (PED) is

= Percentage Change in Quantity Demanded ÷ Percentage Change in Price

= 0.05 ÷ (-0.15)

= -0.33

Since the price elasticity of demand is less than one so here there is an inelastic demand

Therefore the absolute value is -0.33 and it is inelastic