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Problem 3. The Olde Yogurt Factory has reduced the price of its popular Mmmm Sundae from $2.25 to $1.75. As a result, the firm's daily sales of these sundaes have increased from 1,500/day to 1,800/day. Compute the arc price elasticity of demand over this price and consumption quantity range.Q2 = 1800Q1 = 1500P2 = 1.75P1 = 2.25 EP= 1800 - 1500 = 300/1500 = .20 or 20% Q 1.75 - 2.25 = -.5/2.25 = -.22 or -22% P EP = -0.91
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