Karin is a popular hairdresser in a small town. She charges her clients $30 for a haircut and earned $60 000 last year only doing haircuts. This year, Karin decided to increase the price for the haircut by $5. What is the elasticity of demand for Karin's haircut, if the number of her clients has dropped to 1800 per year?
A) It is approximately equal to 2.3.
B) It is approximately equal to 1.68.
C) It is approximately equal to 1.
D) It is approximately equal to 0.68.
Correct Answer:
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