If the price of smart phone decreases from 2800 Riyal to 2600 Riyal as a result...

If the price of smart phone decreases from 2800 Riyal to 2600 Riyal as a result the quantity demanded for mobile increases from 70 devices to 80 devices. Calculate the price elasticity of demand for smart phones

Expert Solution

price elasticity of demand = [ (Q₁ - Q₀) / (Q₁ + Q₀) ] / [ (P₁ - P₀) / (P₁ + P₀) ]

Ped = [ ( 80 - 70) / (80+70) ] / [(2600 -2800) / (2600+2800)

Ped = [10/150) ] / [-200 / 5400)

Ped = 0.06667 / -0.037 = -1.8

Ped = -1.8

Rahul Sunny answered 2 years ago

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