Question

20. If the price of vegetable sandwich rises from 3 6
per piece to 12 per piece as a result of which the daily
sales decreases from 800 to 400 pieces per day. The price
elasticity of demand can be estimated as....... (Use ARC
Elasticity Method)

Answer 1

original demand = 800

new demand = 400

change in demand = 400-800

                                 = -400

original price = 12

new price = 36

change in price = 36-12

                           = 24

elasticity of demand = change in demand / change in price *  original       price/ original demand

Ed = -400/24   x   12/800

     =  -16.66   x   0.015

      =  -0.24