question archive A certain children's toy sells 4100 units when its price is $20 and 2800 units when its price is $28
A certain children's toy sells 4100 units when its price is $20 and 2800 units when its price is $28
Subject:EconomicsPrice:2.88 Bought3
A certain children's toy sells 4100 units when its price is $20 and 2800 units when its price is $28. Calculate its price elasticity of demand, using the technique in the PowerPoints. You will interpret this elasticity in the next question.Enter only numbers, a decimal point, and/or a negative sign as needed. Round your final answer to two decimal places as necessary; if you round on intermediate steps, use four places.
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Elasticity of demand is computed as follows:
- Percentage Change in Demands / Percentage Change in Price
- ($28 - $20) / $20 / (2,800 - 4,100) / 4,100
- 1.26
This means that the demand of the children?s toys is elastic. For every $1 increase in price, there will be a 1.26 decrease in the quantity demanded.
