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Block's sells 500 bottles of perfume a month when the price is $7

Economics

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Block's sells 500 bottles of perfume a month when the price is $7. A huge increase in resource

costs cause the price to rise to $9 and Block only manages to sell 460 bottles of perfume. The

price elasticity of demand is:

.33 and elastic
3.0 and elastic
.33 and inelastic
3.0 and inelastic

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Change in quantity= (500- 460)/ (500+ 460)

= 40/ 960

= 0.0417

Change in price= (7- 9)/ (7+ 9)

= -2/ 16

= -0.125

Price elasticity of demand= 0.0417/ -0.125

= -0.33

So,

The price elasticity of demand is 0.33 inelastic.

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