Homework Help Forum: Economics

Posted by Mike on Friday, October 16, 2009 at 11:45pm.

Here is a question that my professor posted... "Assume the price elasticity of demand for U.S. Frisbee. frisbees is -0.6. If the company increases the price of each frisbee from $6 to $8, the number of frisbees sold will:" The answer is: Decrease by 17.1 percent What I would like to know is how she got to this answer? I have been trying every formula I can think of and nothing is working. Thanks! Mike

• Economics - economyst, Saturday, October 17, 2009 at 11:43am

  Your prof used the mid-point method for calculating percentage change. Price changed by 2 from 6 to 8. Calculate the pct change from the mid-point. i.e., 2/7 = .2857 .2867 * 0.6 = .1714 QED

  
  

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