1) rain spoils the straw berry crop. as a result, the price rises from $2 to $3 apunnet and the quantity demanded decreases from 1,000 to 600 punnet a week. over this price range,
a) what is the price elasticity of demanded?
b)describe the demand for strawberries
could you plz explain it, thanx heapz
2007-03-28 18:50:20 · 2 answers · asked by Anonymous in Social Science ➔ Economics
a. The formula used to calculate the price elasticity of demand is
PEoD = (% Change in Quantity Demanded)/(% Change in Price)
% Change in Quantity Demanded =((600-1000)/1000) * 100% = -40%
% Change in Price =( (3-2)/2) *100% = 50%
PEod= -40%/50% = -0.8 we ignore the negative value so elasticity of demand when the price increases from $2 to $3 is 0.8
b. PEoD < 1 then Demand is Price Inelastic (Demand is not sensitive to price changes) so because the PEod of strawberry is 0.8< 1 it's inelastic which means that changes in price of strawberries have little influence on demand for strawberries.
2007-03-28 19:56:00 · answer #1 · answered by szeplany 2 · 1⤊ 0⤋
The price changed 1.5 and the demand decreased 1.66 so the demand was negatively elastic.
So, the price was an incredible factor.
2007-03-28 19:03:16 · answer #2 · answered by Santa Barbara 7 · 0⤊ 0⤋