Breckenridge Ski and Snow Board Rental Co. charges 76 for a one day rental. At that price they average renting 164 sets of apparatus. Their yield management consultant recommended they lower their price to 52. At that price the consultant expects their average daily rental will be 197 sets of apparatus. At those prices and demand, what elasticity of demand can be expected? (Solve to two decimal places.)
Elasticity of demand is equal to the percentage change of quantity demanded divided by percentage change in price.
| Price | Quantity Demanded |
| 76 | 164 |
| 52 | 197 |
| Percentage Change in Quantity = (164 - 197)/164 = -20.12% |
| Percentage Change in Price = (76 - 52)/76 = 31.58% |
| Elasticity of Demand = Percentage Change in Quantity / Percentage Change in Price |
| Elasticity of Demand = - 20.12 / 31.58 |
| Elasticity of Demand = - 0.64 |
Minus sign before the value of elasticity only shows that price and quantity are inversely related.
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