If a 15 percent increase in the price of Cheerios causes a 1

If a 15 percent increase in the price of Cheerios causes a 13 percent reduction in the number of boxes of cereal? demanded, the price elasticity of demand for Cheerios is minus nothing. ?(Enter your response rounded to two decimal? places.

Solution

Price elasticity of demand = Percentage change in the demand / Percentage change in the price.

= -13% /15%

= -0.86.

The price elasticity of demand for Cheerios is minus 0.86.