Hilda's Hair Hysteria earned $3,750 in total revenue last month when it sold 125 haircuts.This month it earned $3,600 in total revenue when it sold 90 haircuts.The price elasticity of demand for Hilda's Hair Hysteria is
A)0.33.
B)0.88.
C)1.14.
D)7.98.

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. The quantity demanded decreased by 28% (from 125 to 90 haircuts), and the price increased by 4% (from $30 to $40 per haircut). Thus, the elasticity is 28%/4% = 1.14.

Hilda's Hair Hysteria Earned $3,750 in Total Revenue Last Month