Answer to Question #4333 in Microeconomics for Doug Hatten

Question

If the price elasticity of demand for iPhones were 1.8, by how much would iPhone unit sales have increased if the launch price had been $399 instead of $499?

Answer 1

Ε(Q)=(ΔQ/Q1)/(ΔP/P1)
1,8 = ((Q2-Q1)/Q1)/(499-399)/399)

(Q2-Q1)/Q1 =180/399

Q2/Q1 – 1 =180/399

Q2/Q1 =579/399 = 1,45

iPhone unit sales have increased in 1,45 times.