When the price of toothpaste increases by 15 percent, the quantity of toothpaste demanded falls by 30 percent. Calculate the price elasticity of demand. Is the demand for toothpaste elastic, inelastic, or unit elastic?

Question

Quizplus · Accepted Answer

The Answer is Price elasticity of demand = [-30/15] = -2. Since the absolute value of the price elasticity is greater than one, the demand for toothpaste is elastic.

When the Price of Toothpaste Increases by 15 Percent, the Quantity