Price Elasticity of Demand

Price Elasticity of Demand Ts denim Shop sells occasion jeans. The latest trend setter has been Capri cuffed blue jeans. The demand for the Capri jeans has been very(prenominal) high with teenagers and young women. The business has change magnitude its supply of Capri jeans due(p) to the high demand. The owner, Terri Johnson, contemplates increasing the footing from $9.00 to $10.00. Ms. Johnson needs to know the result of the consumers to the increased price. According to McConnell and Brue (2004), the Price Elasticity of Demand measures the browse of response of meter demanded due to a price diversify (p. 1). Using Price Elasticity of Demand In calculative the Price Elasticity of Demand, we use the formula: percentage throw in quantity demanded of product X Ed =percentage transpose in price of product X The percentage change in quantity demanded is divided by the percentage change in price. change in quantity demanded of X Ed = veritable quantity demanded of X change in price of X original price of X According to Economics.about.com, there is another way to enchant this equation (www.economics.about.com).

The equation is: The percentage of change in quantity demanded is: [QDemand(NEW) - QDemand(OLD)] / QDemand(OLD) The percentage of change in price is: [Price(NEW) - Price(OLD)] / Price(OLD) Ts Jean Shop original price for the Capri jeans was $9.00 and the new price is $10.00. So we have the Price (OLD) = $9.00 and Price (NEW) = $10.00. The quantity that has been demanded for the $9.00 is 150 and the increased price of $10.00 is 110. When you go from $9.00 to $10.00 you have QDemand(OLD)= 150 and QDemand (NEW) = 110, where QDemand is short for fix Demanded. So now the equation is Price(OLD) = 9 PRICE(NEW) = 10 QDemand(OLD) = 150 QDemand(NEW) = 110 The percentage change in quantity demand and... If you want to get a serious essay, order it on our website: Orderessay

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