Clulow Corporation recently changed the selling price of one

Clulow Corporation recently changed the selling price of one of its products. Data concerning sales for comparable periods before and after the price change are presented below. Selling Price Unit Sales $34.00 7,800 $31.00 10,010 The product\'s variable cost is $10.50 per unit. The product\'s price elasticity of demand as defined in the text is closest to: -3.19 -2.02 -2.70 -4.13 PLEASE SHOW ALL WORK. THANKS.

Solution

E_s =[Change in Quantity Supplied / ((Q_i + Q_f)/2)] ÷[ Change in Price / ((P_i + P_f) ÷ 2)]

=(2210/8905)/ (-3/32.5)= -2.7