a new sports store was selling 50 soccer balls for $20 each. recently the store changed the price to $30 each and sold only 30 soccer balls per day.what is the approximate price elasticity of demand for soccer balls?
To calculate the approximate price elasticity of demand for soccer balls, we need to use the following formula:
Price Elasticity of Demand = Percentage change in quantity demanded / Percentage change in price
Let's go step by step:
1. Calculate the percentage change in quantity demanded:
Initial quantity demanded = 50 soccer balls per day
Final quantity demanded = 30 soccer balls per day
Percentage change in quantity demanded = (Final quantity demanded - Initial quantity demanded) / Initial quantity demanded * 100%
= (30 - 50) / 50 * 100%
= -20 / 50 * 100%
= -40%
2. Calculate the percentage change in price:
Initial price = $20 each
Final price = $30 each
Percentage change in price = (Final price - Initial price) / Initial price * 100%
= ($30 - $20) / $20 * 100%
= $10 / $20 * 100%
= 50%
3. Plug the values into the price elasticity of demand formula:
Price Elasticity of Demand = Percentage change in quantity demanded / Percentage change in price
= -40% / 50%
≈ -0.8
Therefore, the approximate price elasticity of demand for soccer balls is approximately -0.8.