Question

When the local used bookstore prices economics books at $15.00 each, they sell 70 books per month. If they lower the price to $7.00 each they sell 90 books. If so, the price elasticity of demand for the books is

Answer 1

Answer:

0.34,

Explanation:

% change in qty = { (90-70) / [(90+70)/2} *100 = 25%

% chnage in price =  { (7-15) / [(7+15)/2} *100 = -72.73%

PRICE ELA OF DEMAND = CHANGE IN QTY/  CHANGE IN PRICE

PRICE ELA OF DEMAND =  25/72.73 = 0.343

an increase in price from $7.00 to $15.00 results in an increase in total revenue.

Answer 2

The price elasticity of demand for the books when 90 books are sold when the prices are lowered from $15 to $7 each will be 0.34.

What is price elasticity of demand?

A percentage change in the quantity demanded for particular goods or services due to a percentage change in the price of such goods or services is known as the price elasticity of demand.

For the given case, the price elasticity of demand will be calculated as,

$\rm Price\ Elasticity\ of\ Demand\ = \dfrac{\dfrac{Final\ Quantity-Initial\ Quantity}{Initial\ Quantity}}{\dfrac{Final\ Price- Initial\ Price}{Initial\ Price}}\\\\\rm Price\ Elasticity\ of\ Demand\ = \dfrac{\dfrac{90-70}{70}}{\dfrac{15- 7}{7}}\\\\\rm Price\ Elasticity\ of\ Demand\ = 0.34$

Hence, the price elasticity of demand is calculated as above.

Learn more about price elasticity of demand here:

https://brainly.com/question/20630691

#SPJ2