Answer to Question #153796 in Microeconomics for Alex

Question

Calculate the price elasticity of demand if the price changed from $13 to $12 and from $2 to $1

Answer 1

Price elasticity in demand is defined as change in demand relative to the prices and can be calculated in mathematical terms to determine their impact in the economy.

It is calculated by dividing percentage quantity demanded and the percentage change in overall prices.

The calculation is as follows;

$(12-13)/(12+13)=-1/25$

(1-2)/(1+2)=-1/3

=3/25

=0.12