Suppose the price of apples rises from $3.50 a pound to $4.00 and your consumption of apples drops from 30 pounds of apples a month to 20 pounds of apples. Calculate your price elasticity of demand of apples. What can you say about your price elasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic? Be sure to show the work you used to support your answer

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To calculate the price elasticity of demand (PED), you can use the following formula:

PED = (Percentage change in quantity demanded) / (Percentage change in price)

First, calculate the percentage change in quantity demanded:
Change in quantity demanded = Initial quantity demanded - Final quantity demanded
ΔQ = 30 - 20 = 10 pounds

Percentage change in quantity demanded = (Change in quantity demanded / Initial quantity demanded) x 100%
%ΔQ = (10 / 30) x 100% ≈ 33.33%

Next, calculate the percentage change in price:
Change in price = Final price - Initial price
ΔP = 4.00 - 3.50 = $0.50

Percentage change in price = (Change in price / Initial price) x 100%
%ΔP = (0.50 / 3.50) x 100% ≈ 14.29%

Now, plug these values into the PED formula:
PED = (Percentage change in quantity demanded) / (Percentage change in price)
PED = %ΔQ / %ΔP
PED = 33.33% / 14.29%
PED ≈ 2.33

The price elasticity of demand (PED) for the apples is calculated to be approximately 2.33.

Given that the absolute value of the PED is greater than 1, this means the demand for apples is elastic. It indicates that consumers are sensitive to changes in the price of apples and are responsive by reducing their quantity demanded by a relatively higher percentage compared to the percentage change in price. In this case, a 1% increase in price results in approximately a 2.33% decrease in quantity demanded.