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1. When the local grocery store puts peanut butter on sale, reducing its price from $4.20 per item to$3.80 per item, the quantity sold increases from 200 per week to 230 per week. This response illustrates which of the following concepts?

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2. What does this concept represent?

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3. Let's look at the first part of the formula. How do we find the percentage change in quantity using the midpoint formula?

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4. How do we express the percentage change in quantity using the variables Q1 (original quantity) and Q2 (new quantity)?

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5. Now calculate the percentage change in quantity demanded by plugging in the numbers for Q1 and Q2.

percentage change in quantity demanded =
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6. Now let's look at the second part of the formula. How do we find the percentage change in price using the midpoint formula?

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7. How do we express this using the variables P1 (original price) and P2 (new price)?

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8. Now plug in the numbers for P1 and P2 to calculate the percentage change in price.

9. Finally, using the whole formula, calculate the value of the price elasticity of demand for peanut butter.

price elasticity of demand =
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10. Explain what this result means in words. Then click 'Submit' to compare your answer to ours.

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