Boden Company's management believes that every 2% increase in the selling price of one of the company's products would lead to a 5% decrease in the product's total unit sales. The product's variable cost is $19.30 per unit.
-The product's price elasticity of demand as defined in the text is closest to:
A)-3.01
B)-2.07
C)-1.89
D)-2.59

Question

Quizplus · Accepted Answer

F1F1F1S1F1F1F10_d = ln(1 + % change in quantity sold)/ln(1 + % change in price) = ln(1 + (-0.05))/ln(1 + (+0.02))= -2.59

Boden Company's Management Believes That Every 2% Increase in the Selling