When the price of fuzzy blankets decreased by $10 \%$, Mr. Fields bought $20 \%$ more fuzzy blankets.

What is Mr. Fields' price elasticity of demand for blankets?
Choose 1 answer:
(A) unit elastic
(B) perfectly elastic
(c) Elastic
(D) perfectly inelastic
(E) inelastic

Question

When the price of fuzzy blankets decreased by $10 \%$, Mr. Fields bought $20 \%$ more fuzzy blankets.

What is Mr. Fields' price elasticity of demand for blankets?
Choose 1 answer:
(A) unit elastic
(B) perfectly elastic
(c) Elastic
(D) perfectly inelastic
(E) inelastic

Accepted Answer

∻Solution∻ ‖ a ⋮ Price Elasticity of Demand Formula: The price elasticity of demand is calculated using the formula $E_d = \frac{\%\Delta Q_d}{\%\Delta P}$, where $\%\Delta Q_d$ is the percentage change in quantity demanded and $\%\Delta P$ is the percentage change in price. ‖ ‖ b ⋮ Calculating Mr. Fields' Price Elasticity of Demand: Given that the price of fuzzy blankets decreased by $10\%$ and Mr. Fields bought $20\%$ more fuzzy blankets, we can plug these values into the formula to get $E_d = \frac{20\%}{-10\%} = -2$. The negative sign indicates the inverse relationship between price and quantity demanded, which is typical for price elasticity of demand. ‖ ∻Answer∻ ⚹ C) Elastic ⚹ ∻Key Concept∻ ⚹ Price Elasticity of Demand ⚹ ∻Explanation∻ ⚹ The price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. If the absolute value of the elasticity is greater than 1, the demand is considered elastic. In this case, Mr. Fields' price elasticity of demand for blankets is -2, which is greater than 1 in absolute value, indicating elastic demand. ⚹◊What is the formula for price elasticity of demand in economics?⍭ Generate me a similar question◊

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