Description
John, the new marketing manager of Doc’s Cola recently decided to increase the bottle of soda by 5 cents. He needs to calculate the correct formula for the calculation of price elasticity of demand. Which calculation below is the correct formula for price elasticity?
E = percent change in price/percent change in demand
E = percent change in demand/percent change in price
E = percent change in demand/percent change in supply
E = percent change in supply/percent change in demand
Explanation & Answer
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E = percent change in demand/percent change in price
The Price Elasticity of Demand measures the rate of response of quantity demanded due to a price
change.
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