A food supplement store sold a vitamin for 200 a bottle and

A food supplement store sold a vitamin for $2.00 a bottle and in one month sold 2,000 bottles. After a price increase, the vitamin sold for $2.20 a bottle and the store sold 1,900 bottles the next month. What is the elasticity of demand

A food supplement store sold a vitamin for $2.00 a bottle and in one month sold 2,000 bottles. After a price increase, the vitamin sold for $2.20 a bottle and the store sold 1,900 bottles the next month. What is the elasticity of demand

Solution

P₁ = $2.00 and Q₁ =2000

P₂ = $2.20 and Q₂ = 1900

E_D = [(1900 - 2000) / 2.20 - 2.00] x [(2.00+2.20) / (2000+1900)]

     = -100/0.20 x 4.20 / 3800

    = 500 x 0.0011 = - 0.55