Ask Question
21 June, 02:43

Rain spoils the strawberry crop, the price of strawberries rises from $2 to $4 a box, and the quantity demanded decreases from 1 comma 400 to 1 comma 000 boxes a week. Calculate the price elasticity of demand over this price range. Describe the demand for strawberries.

+1
Answers (1)
  1. 21 June, 05:17
    0
    a. Price elasticity of demand is 3.5.

    b. Demand for strawberries elastic.

    Explanation:

    a. Calculate the price elasticity of demand over this price range.

    Price elasticity of demand can be calculated as the percentage change in price divided by percentage change in quantity demanded.

    We can therefore proceed as follows:

    Percentage change in price = [ (4 - 2) : 2] * 100 = 100%

    Percentage change in quantity demanded = [ (1,400 - 1,000) : 1,400] * 100 = 28.57%

    Price elasticity of demand = 100% : 28.57% = 3.5

    Therefore, the price elasticity of demand over this price range is 3.5.

    b. Describe the demand for strawberries.

    Since the calculated price elasticity of demand of 3.5 is greater 1, this implies that demand for strawberries elastic. That is, customers are sensitive and more responsive to the change in price of strawberries.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Rain spoils the strawberry crop, the price of strawberries rises from $2 to $4 a box, and the quantity demanded decreases from 1 comma 400 ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers