Suppose Jasper buys 35 quarts of bottled water each month when the price per quart is...
Suppose Jasper buys 35 quarts of bottled water each month when the price per quart is $1. When the price declines to $0.60 per quart, he buys 45 quarts each month. Jasper's price elasticity of demand for water equals _____.
a. –1.00
b. –0.75
c. –0.50
d. –0.25
Homework Answers
Price elasticity of demand = [(q2-q1)/((q2+q1)/2)] / [(p2-p1)/((p2+p1)/2)]
Price elasticity of demand = [(45-35)/((45+35)/2)] / [(0.6-1)/((0.6+1)/2)]
= [(10)/(40)] / [(-0.4)/(0.8)]
= 0.25 / -0.5
= -0.5
option C is correct answer
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