Question

If an 11 per cent increase in the price of​ Kellogg's cereal causes a 12 per...

If an 11 per cent increase in the price of​ Kellogg's cereal causes a 12 per cent reduction in the number of boxes of cereal​ demanded, what is the price elasticity of demand for​ Kellogg's cereal? nothing ​(Enter a numeric response using a real number rounded to two decimal​ places.)

The demand for​ Kellogg's cereal is; Unit-elastic, inelastic or elastic? .

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Answer #1

Note that price elasticity of demand for​ Kellogg's cereal = % change in the quantity demanded or sales / % change in the price

= -12% / 11%

= -1.09

Hence, price elasticity of demand for​ Kellogg's cereal is -1.09

The demand is elastic because the value of elasticity in absolute terms is greater than 1.

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