Question

Suppose that during the past year, the price of a laptop computer fell from $2,350 to $1,930. During the same time period, consumer sales increased from 436,000 to 537,000 laptops.

Calculate the elasticity of demand between these two price

Answer 1

Answer:

-1.06

Explanation:

The computation of the elasticity of demand between these two price is shown below:

                   (A)           (B)      (A + B) ÷ 2 (B - A)

Particulars Original  New Average Change Percentage in change

Quantity 436000 537000 486500 101000 20.76%

Price $2,350 $1,930 $2,140 $-420 -19.63%

As we know that

Price elasticity of demand = (Percentage change in quantity demanded) ÷ (percentage change in price)

= 20.76%  ÷ - 19.63%

= -1.06