Question

Calculate your price elasticity of demand as the price of compact discs increases from 8 to 10 if your income is 10 000, and your income is 12 000

Answer 1

% change in quantity=${(12000-10000)\over(12000+10000)/2}*100 =33.33$

%change in price=${(10-2)\over(10+8)/2}*100 =22.22$

Price elasticity of demand = ${33.33\over22.22} =1.5$