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When a university bookstore prices chemistry textbooks at $200 each, it generally sells 120 books per month. If it lowers the price to $160, sales increase to 160 books per month. Given this information, we know that the price elasticity of demand for chemistry books is about

Respuesta :

Answer:

price elasticity of demand = - 1.286

so as decrease price from $200 to $160 quantity sale increase

so total revenue increase

Explanation:

given data

bookstore prices 1= $200 each

sells quantity 1  = 120 books per month

lowers price 2 = $160

sales increase quantity 2 = 160 books per month

to find out

price elasticity of demand

solution

we get here price elasticity of demand that is express as

price elasticity of demand = [tex]\frac{\frac{quanity2 - quantity1}{(quantity2+quantity1)/2} }{\frac{price2-price1}{(price2+price1)/2} }[/tex]   .................1

put here value we get

price elasticity of demand = [tex]\frac{\frac{160-120}{(160+120)/2} }{\frac{160-200}{(160+200)/2} }[/tex]

solve it we get

price elasticity of demand = - 1.286

so as decrease price from $200 to $160 quantity sale increase

so total revenue increase