If the price of a slice of pizza rises from 5 to 6 and quant

If the price of a slice of pizza rises from $5 to $6, and quantity demanded falls from 20,000 slices to 14,800 slices, using the formula for arc price elasticity what is the percentage change in price?

18.18%

29.89%

20%

16.67%

Solution

The percentage change in price is 18.18%

The percentage change in price = [(P2 - P1) / {(P2 + P1) / 2}] * 100

The percentage change in price = [(6 - 5) / {(6 + 5) / 2}] * 100

The percentage change in price is:( 1 / 5.5 ) * 100

The percentage change in price is 18.18%