Question

Take a look at Figure 19-2. Work out the calculation for the price elasticity of demand between prices of \( 6 per reservation and \) 5 per reservation to prove that the value is 1.

Short answer

the price elasticity of demand is$1$

Step-by-step solution

Given Information

The calculation for the price elasticity of demand between prices of $$6$per reservation and $$5$per reservation.

Price elasticity of demand estimates how much the interest for the ware changes with one unit change in the cost of the item.

Explanation

We know price elasticity can be calculated using,

$e_{\left(p\right)}=\frac{dQ/Q}{dP/P}$

Q is the quantity of demanded goods and P is the price

$$\begin{gathered} =\frac{1}{11/2}\times \frac{11/2}{-1} \\ =-1 \end{gathered}$$

Hence the price elasticity of demand is 1