Question

When the price of a product increases by 6% and the quantity demanded of the product changes from 1 400 to 1 200, what is the price elasticity of demand of the product? (Ignore the negative sign and round off to 2 decimal places)

Answer 1

$Е = ∆Q / ∆P$

∆Q(%) = (Q2-Q1)/Q1

∆P(%) = (P2-P1)/P1

∆P=6%

∆Q=(1200-1400)/1400=0.14=14%

$Е = 14/6=2.33$