Illustrate what is the price elasticity of demand

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Price Elasticity BrainMass Expert explains

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Estimating and analyzing the elasticity of demand for IT services

2007 prices
Server Performance Monitoring Price per server per month
Windows $ 18
UNIX $ 20
SAP $ 22
Database $ 22

2008 prices
Server Performance Monitoring Price per server per month
Windows $ 10
UNIX $ 12
SAP $ 14
Database $ 14

The server rate was officially defined for 2008 and represents a reduction of 43% below the 2007 rate. The rate reduction is the result of Productivity Savings, Automation Projects, Install Base Growth, and Reduced Infrastructure Costs. The number of servers that is being monitored is 70,000 which is a growth of 10,000 servers from the previous year. What is the price elasticity of demand? From the price elasticity what should the new rates be for 2009 if the demand increases at the same rate?

Reference no: EM1328460

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