1. Calculating the price elasticity of demand: A step-by-step guide Suppose that during the past year,...

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1. Calculating the price elasticity of demand: A step-by-step guide Suppose that during the past year, the price of a laptop

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Answer 1

Answer #1

	Absolute change	Average	Percentage change
Quantity demanded	-128000	386000	-0.33
Price	190	2845	0.07


Original price $	2750
New price $	2940
Absolute change	190

Original quantity demanded	450000
New quantity demanded	322000
Absolute change	-128000


Average quantity
(Original quantity + New Quantity)/2	(450000+322000)/2
	772000/2
	386000

Average price
(Original price + New price)/2	(2750+2940)/2
	5690/2=
	2845


Percentage change
Quantity demanded
Absolute change/Average quantity	(-128000/386000)
	-0.33

Price
Absolute change/Average price	190/2845
	0.07

Step 4
Percentage change in quantity demanded/ Percentage change in price
(-0.33/0/07)
-4.97
PED= 4.97

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