Suppose an 18 percent drop in the price of strawberries leads to a 24 percent increase in the quantity demanded of strawberries and a 12 percent decrease in the quantity demanded of plums. What is the price elasticity of demand for strawberries?

- 1.33

Explanation:

Given that,

Percentage change in the price of strawberries = 18 percent

Percentage change in the quantity demanded of strawberries = 24 percent

Percentage change in the quantity demanded of plums = 12 percent

Therefore,

Price elasticity of demand:

= Percentage change in the quantity demanded of strawberries ÷ Percentage change in the price level of strawberries

= 24 ÷ 18

= - 1.33

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