Flavor Flav has released a new exercise DVD for
his loyal fans. If he charges $20 he expects to sel
l
10,000 copies; if he charges $30, he expects to sel
l 8,000 copies. Calculate the elasticity of demand
for
this product between those two points. Is this dema
nd elastic or inelastic
Elasticity of demand= - (change in quantity/ change in price * current price/current quantity)
Given, change in quantity= 2000 ( 10000-8000)
change in price= -30 (20-30)
current price= 30
current quantity= 8000
therefore, Ed = - (2000/-30 *30/8000)
=- (-66.6*0.003)
=0.233 ( thus the demand is inelastic as it below 1)
Flavor Flav has released a new exercise DVD for his loyal fans. If he charges $20...
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