Reference no: EM13202221
Suppose that over the past year, the price of laptop computers has fallen from $2,000 to $1,800. Over the same time period, sales to consumers have increased from 700,000 to 800,000 units. Calculate the elasticity of demand between these two points by following these steps:
1. Calculate the change in quantity.
2. Divide the change in quantity by the average of the two quantities to get one measure of the percentage change in quantity. (The average is equal to the sum of the two quantities divided by 2.)
3. Calculate the change in price.
4. Divide the change in price by the average of the two prices to get a measure of the percentage change in price.
5. Divide the percentage change in quantity by the percentage change in price.
6. Take the absolute value of the fraction so that you have a positive number. Using this method, find the elasticity of demand for laptop computers.
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