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Using Supply and Demand to Formulate Business Plans.

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Suppose the price of apples rises from $3 a pound to $3.45 and your consumption of apples drops from 30 pounds of apples a month to 21 pounds of apples. Calculate your price elasticity of demand of apples. What can you say about your price elasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic?

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This provides the steps to calculate the price elasticity of demand

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Elasticity is the proportional change in one variable relative to the proportion change in another variable. The concept of elasticity can be used whenever there is a cause and effect relationship. The causal variable is often called the independent variable, while the affected variable is called the dependent ...

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