Question

I need to confirm my answer to the following question.

9. When the price of a quart of milk increased from $1.55 to $2.00 the quantity demanded decreased from 21,000 per day to 19,000 per day. In this range, the price elasticity of demand is:

Answer 1

Ans: -0.39 or 0.39 ( absolute value)

Explanation:

Initial price ( P1 ) =$1.55

New price ( P2 ) =$2.00

Initial quantity ( Q1) =21000

New quantity (Q2) = 19000

PED =

= (( 19000 - 21000) / ( 2.00 - 1.55))* (( 1.55 + 2.00) / ( 21000 + 19000))

= ( -2000 / 0.45) * ( 3.55 / 40000)

= - 4444.44 * 0.00008875

= -0.39 or 0.39 ( absolute value)