What is the coefficient of demand elasticity for the Apple watch? Is this elastic or inelastic?...

What is the coefficient of demand elasticity for the Apple watch? Is this elastic or inelastic? How do you interpret that coefficient? (Use $349 and $299 in your calculation). The quantity associated with $349 is 177,200. The quantity associated with $299 is 297,200.

Solutions

Expert Solution

Coefficient of Demand elasticity is given by :-

Using the data given in question

Now,

Coefficient of Elasticity = |E_d|

So,

So, Coefficient of Demand Elasticity is 3.2782

As,

So, Demand is an Elastic demand

Interpretation

As we know that for an elastic demand i.e. when price elasticity of demand is greater than one the responsiveness of a given percentage change in price has higher percentage change in quantity demanded. So if price decreases slightly then the quantity demanded increases at an even faster rate and conversely if the price increases slightly then the quantity demanded decreases at am even faster rate.

Rahul Sunny answered 1 month ago

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