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Question 1

Suppose that a store reduces the price of laundry detergent from $4.2 to $3.7. As a result, quantity demanded increases from 200 to 250.

Using the point elasticity approach, calculate percentage change in price.

Your answer should be expressed in absolute value terms.

 

Hint




Question 2

Suppose that a store decreases the price of cereal from $4.2 to $3.4. As a result, quantity demanded increases from 220 to 260.

Using the point elasticity approach, calculate price elasticity of demand.

Your answer should be expressed in absolute value terms.

 

Hint