Determine the price elasticity of demand for a microwave that experienced a 20% drop in price and a 50% increase in weekly quantity demanded.
Question
Solution 1
To determine the price elasticity of demand, we use the formula:
Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price
Given in the problem, we have:
% Change in Quantity Demanded = 50% % Change in Price = -20%
Substitute these values into the formula:
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