Explore BrainMass

Explore BrainMass

    Price elasticity of demand when price changes

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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.)

    © BrainMass Inc. brainmass.com October 10, 2019, 5:31 am ad1c9bdddf

    Solution Preview

    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 ...

    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.