Harvey Company recently changed the selling price of one of its products.Data concerning sales for comparable periods before and after the price change are presented below. The product's price elasticity of demand as defined in the text is closest to:
A)-1.98
B)-1.78
C)-2.40
D)-1.92

Question

Harvey Company recently changed the selling price of one of its products.Data concerning sales for comparable periods before and after the price change are presented below.  The product's price elasticity of demand as defined in the text is closest to:
A)-1.98 
B)-1.78 
C)-2.40 
D)-1.92

Quizplus · Accepted Answer

Percent change in price = ($29.00 - $30.00) F1F1F1S1F1F1F10 $30.00 = -3.3333%
Percent change in total unit sales = (5,870 - 5,500) F1F1F1S1F1F1F10 5,500 = 6.7273%
Price elasticity of demand
= ln(1 + % change in quantity sold) F1F1F1S1F1F1F10 ln(1 + % change in price)
= ln(1 + 6.7273%) F1F1F1S1F1F1F10 ln(1 + -3.3333%) = -1.92

Harvey Company Recently Changed the Selling Price of One of Its