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Suppose the price of apples rises from $3.50 a pound to $4.00 and your consumption of apples drops from 30 pounds of apples a month to 20 pounds of apples. Calculate your price elasticity of demand of apples. What is the price elasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic?

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Solution Summary

The price elasticity of supply is determined.

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Percentage Change in Price=(new price - initial price)/Initial Price = (4 - 3.50)/3.50 = 1/7
Percentage Change in Quantity Demanded=((new quantity- ...

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