Hanson Corporation recently changed the selling price of one of its products.Data concerning sales for comparable periods before and after the price change are presented below. The product's price elasticity of demand as defined in the text is closest to:
A)-1.71
B)-1.65
C)-1.85
D)-2.45

Question

Hanson Corporation recently changed the selling price of one of its products.Data concerning sales for comparable periods before and after the price change are presented below.  The product's price elasticity of demand as defined in the text is closest to:
A)-1.71 
B)-1.65 
C)-1.85 
D)-2.45

Quizplus · Accepted Answer

ε_d = ln(1 + % change in quantity sold)/ln(1 + % change in price) = ln(1 + (5, 000 - 5, 200)/5, 200)/ln(1 + ($63 - $62)/$62)= -2.45

Hanson Corporation Recently Changed the Selling Price of One of Its