The weekly sales in Honolulu Red Oranges is given by the following equation. $q = 1,070 - 24 p$
Calculate the elasticity of demand for a price of $27 per orange. Round your answer to the two decimal places.

A)-1.54
B) -1.65
C) 1.65
D) 1.43
E) 1.54

Question

The weekly sales in Honolulu Red Oranges is given by the following equation.   $q = 1,070 - 24 p$  
Calculate the elasticity of demand for a price of $27 per orange. Round your answer to the two decimal places.
 
A)-1.54
B) -1.65
C) 1.65
D) 1.43
E) 1.54

Quizplus · Accepted Answer

The elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. In this case, the quantity demanded is given by the equation q = 1,070 - 24 p. If the price increases from $26 to $27, the quantity demanded will decrease from 1,070 - 24(26) = 682 to 1,070 - 24(27) = 658. The percentage change in quantity demanded is therefore (658 - 682) / 682 = -0.035. The percentage change in price is (27 - 26) / 26 = 0.038. Therefore, the elasticity of demand is -0.035 / 0.038 = -0.92.

The Weekly Sales in Honolulu Red Oranges Is Given by the Following