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8 June, 08:00

Suppose an 18 percent drop in the price of strawberries leads to a 24 percent increase in the quantity demanded of strawberries and a 12 percent decrease in the quantity demanded of plums. What is the price elasticity of demand for strawberries?

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  1. 8 June, 08:19
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    - 1.33

    Explanation:

    Given that,

    Percentage change in the price of strawberries = 18 percent

    Percentage change in the quantity demanded of strawberries = 24 percent

    Percentage change in the quantity demanded of plums = 12 percent

    Therefore,

    Price elasticity of demand:

    = Percentage change in the quantity demanded of strawberries : Percentage change in the price level of strawberries

    = 24 : 18

    = - 1.33
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