When abdominoplasty costs were 6000 Dr Hurwitz treated 300 p

When abdominoplasty costs were $6,000, Dr. Hurwitz treated 300 patients. When they dropped the price to $5,000, customers increased to 600.

How do you describe the elasticity of demand for this medical service?

elastic

inelastic

unitary elastic

perfectly elastic

perfectly inelastic

Solution

When costs or price =6000, Q=300

Costs or price =5000,Q=600

% change in quantity=(600-300/300)(100)=100%

% change in price=(5000-6000/6000)(100)= -17%

Elasticity of demand=%change in quantity/%change in price=-[100/(-17)]= 5.9

Since elasticity is greater than one,so demand is elastic.