Suppose that during the past year, the price of a laptop computer fell from $2,500 to $2,300. during the same time period, consumer sales increased from 403,000 to 549,000 laptops.

Question

Riley Clarke

Business

17 January, 10:33

Suppose that during the past year, the price of a laptop computer fell from $2,500 to $2,300. during the same time period, consumer sales increased from 403,000 to 549,000 laptops.

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Gauge Becker · Answer 1

I am assuming that you are looking for the price elasticity of demand.

Price elasticity of demand = percentage change in quantity demanded

percentage change in price

Quantity demanded: from 403,000 to 549,000

Change in demand: 549,000 - 403,000 = 146,000 increase in sales

percentage change: 146,000 / 403,000 = 0.36 or 36% increase

Price: from 2,500 to 2,300

Change in Price: 2,300 - 2,500 = - 200 decrease in price

percentage change: 200 / 2,500 = 0.08 or 8% decrease

Price elasticity of demand = 36% / 8% = 4.5

Since the price elasticity of demand is greater than 1, it means that the demand of the product is greatly affected by the price of the product.