Suppose the price of blueberries falls from $2.80 per pound to $2.60 per pound. As a result, the quantity of blueberries demanded increases from 35 million pounds to 40 million pounds. What is the price elasticity of demand for blueberries (by the absolute value)?
| Price Elasticity of demand: | |||||||||
| Change in price : 2.80 -2.60 = -0.20 | |||||||||
| Change in demand : 40-35 = 5 | |||||||||
| % change in Price: -0.20 / 28 = - 0.714% | |||||||||
| % change in demand: 5 /35 = 14.29% | |||||||||
| Price elasticity of demand: % change in demand/ % change in price | |||||||||
| 14.29 % / - 0.714% = -20 | |||||||||
| Price elasticity of demand (Absolute value): 20 | |||||||||
| Nte: Here Mid point method of price elasticity could also be applied by taking average prirce and demand. | |||||||||
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