Question

1) If quantity demanded for sneakers falls by 2.4 percent when price increases 17.2 percent, we know that the absolute value of the own price elasticity of sneakers is: _______

Answer 1

Own price elasticity of demand is defined at the degree to which the quantity demanded changes due to change in its own price. Its formula is given as follows:

Own price elasticity = = percentage change in quantity demanded / percentage change in price

Given that % change in quantity demaned of sneakers is -2.4%(fall) and % change in price of sneakers is 17.2%(rise), its elasticity is given by

eP = - 2.4 / 17.2 = - 0.1395

Thus, the absolute value of own price elasticity of sneakers is  0.1395.