Question

Carla consumes 10 juices per week when the price is $1.50 per unit. A reduction in this year’s orange crop led to 50% an increase in the price of juice. At the new price level, Carla’s weekly juice consumption fell to 6 units. Calculate Carla’s own- price elasticity of demand for juice. Hints: Use the Arc Method (or Mid-Point Formula). Use two decimal spaces to round-off your answer. For example, if your answer is -3.257123 , it should be entered as: -3.26. Make sure you enter the elasticity coefficient in "absolute value" terms; for example - 3.26 (shown above) should be entered as: 3.26.

Answer 1

juice price post 50% rise=1.50*(1+50%)=2.25

using Arc method

Carla’s own- price elasticity of demand for juice

=((6-10)/10)/((2.25-1.50)/1.50)

=-0.80

the above is answer..