When the price of hot dogs is $1.50 each, 500 hot dogs are sold every day. After the price falls to $1.35 each, 510 hot dogs are sold every day. At the original price, what is the price elasticity of demand for hot dogs?

Question

Quizplus · Accepted Answer

The percentage change in quantity demanded is 0.02 (= 10/500)and the percentage change in price is 0.1 (= $0.15/$1.50), so elasticity is 0.02/0.1 = 0.2.

When the Price of Hot Dogs Is $1