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Need double check on Price Elasticity Please

  1. Mar 22, 2008 #1
    [SOLVED] Need double check on Price Elasticity Please

    Question:
    If the price of soda doubles from $1.00 per can to $2.00 per can and you buy the same amount, what is your price elasticity of demand for soda, and is it considered elastic or inelastic.

    Formula:
    % of Change in Quantity of Demand / % of Change in Price

    Attempt:
    I figure since the demand is the same the formula is 1/.5 = 2.0 So its inelastic correct?

    I know this is a stretch on the forum considering its more economics. But this forum never lets me down :)
     
  2. jcsd
  3. Mar 24, 2008 #2

    CRGreathouse

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    Yes, your demand is perfectly inelastic over that price range. (It might not be perfectly inelastic if it went to a million dollars. :p.)
     
  4. Mar 25, 2008 #3

    HallsofIvy

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    If "you buy the same amount" why is the "% of Change in Quantity of Demand" equal to 1? I would have thought the change was 0. Also if "If the price of soda doubles from $1.00 per can to $2.00 per can" why is the "% of Change in Price" 0.5? I would have thought it would be 100%.
     
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