Answer to Question #169210 in Microeconomics for Ishaan

Question #169210

The number of sales per week of an $80 pair of jeans is 25. The number of weekly sales goes

up to 45 when the price is reduced by 30%.

(a) Find the percentage change in demand.

(b) Find the average elasticity of demand.

Expert's answer

(a)

\%Q=\dfrac{Q_2-Q_1}{Q_1}\times100\%=\dfrac{45-25}{25}\times100\%=80\%.

(b)

E_d=\dfrac{\Delta \%Q}{\Delta\%P}=\dfrac{80\%}{-30\%}=-2.67.

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