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Price elasticity of demand when price changes

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If the demand for soda in a vending machine is represented by the equation Qd=120-40P, what is the price elasticity of demand if the price changes from 1.1 to 2.3? (Hint: you will first need to find the quantity purchased at the two different prices.)

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Solution Summary

This solution shows the calculation of price elasticity of soda sold in a vending machine, when price changes. The quantity demanded is given as an equation Qd = 120-40P.

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Dear Student:

Step 1. First, solve the quantity demanded at each price using the equation Qd = 120 - 40P, where P=price.
Qd(1) = 120 - 40*(1.1) = 76
Qd(2) = 120 - 40*(2.3) = 28
Thus, an increase in the price decreases the quantity demanded. It ...

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