Consider the following scenario. A local pharmacy puts a popular brand of over-the-counter allergy medication, a 30-tablet pack, on sale at 30% off for a week. The quantity of that medication sold during that week (the number of 30-tablet packs), was 27% higher than the week before. The value of the price elasticity of demand for that allergy medication in this particular market is ___________ and demand can be considered _____________.

Question

Quizplus · Accepted Answer

Price elasticity is the ratio of the percentage change in quantity demanded over the percentage change in price: 27%/30% = 0.9. When the resulting percentage change in quantity (27%) is less than the percentage change in price that caused it (30%), the demand is relatively unresponsive to a change in price, or inelastic.

Consider the Following Scenario