Question

Suppose that when the price of milk rises 20%, the quantity demanded of milk falls 10%. Based on this information, what is the approximate absolute price elasticity of demand for milk

Answer 1

0.5

Step-by-step explanation:

Calculation for what is the approximate absolute price elasticity of demand for milk

Using this formula

Price elasticity of demand=Quantity demanded/ Increase in price

Let plug in the formula

Price elasticity of demand=10%/20%

Price elasticity of demand=0.5

Therefore the approximate absolute price elasticity of demand for milk will be 0.5