Suppose at a price of 10 quantity demanded is 100 and when p

Suppose at a price of $10 quantity demanded is 100 and when price is $11 quantity demanded is 85. What is the price elasticity of demand? Show all your work. Interpret this number completely.

Solution

It is a measure of relationship between the change in quantity demanded and change in price.

% change in quantity demanded/ % change in price

(11-10/10)/(85-100/100)

=(1/10)/(-15/100)

=0.1/-0.15

=-0.66 is the answer