Question
Your company has experimented with different prices over the past few months, and has obtained the following data: in October, your product's price (P) was
- Your company has experimented with different prices over the past few months, and has obtained the following data: in October, your product's price (P) was $22.00 and the quantity sold (Q) was 130 units; in November, P = $21.50 and Q = 135 units; in December, P = $21.00 and Q = 140 units; and in January, P = $20.50 and Q = 143 units.
a. Find the elasticity of demand between October and November. How would you characterize demand between these two months?
b. Find the elasticity of demand between December and January. How would you characterize demand between these two months?
c. Are you surprised that the elasticity values differ, even for the same product?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the elasticity of demand we can use the formula Elasticity of Demand Change in Quantity Demanded Change in Price Lets calculate the elast...
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Step: 2
Step: 3
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Cost Accounting
Authors: William K. Carter
14th edition
759338094, 978-0759338098
