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The price of cookies was increased from $4 to $5, the quantity demanded by stores went down 50%, what is price elasticity of demand?

Respuesta :

ak78
Assume the normal quantity of cookies is x.

The demanded quantity by the stores now:
0.5x
The previous cost is: $4 * 0.5x = $2x

The cost of demanded quantity by the stores now: $5 * 0.5x = $2.5x

The price elasticity of demand: $2.5x - $2x = $0.5x

Hope that helps you

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