posted by Kim on .
Just when you really, really want an ice cream cone, the price is rising. But it isn't summertime gouging by manfacturers. The cost of milk fat, the principal ingredient in ice cream, jumped 71% druing the past 6 months to 2.22 at the end of June. As a result, retail prices of ice cream are up 4% from last year, manfacturers say, triggering a 3% drop in comsumption. What is the price elasticty of demand for ice cream? Show calculations
Price elasticity is the percentage change in quantity demanded divided by the percentage change in price. You have presented all the info you need to do this simple calculation.
how do you work these problems
uppose that Paulie and Vinny each can produce ice cream or t-shirts. The table below shows the quantity of each good that Paulie and Vinny each can produce in one hour, respectively, if they devote all of their time and effort into making the good.