Answer:
0.87
Explanation:
Price elasticity is defined as a measure of how responsive the quantity of a product demanded is to changes in its price.
It is important in determining how price changes affects the demand of a product.
The supplier uses this to gauge how an increase in price will affect demand and by extension their profits.
It is calculated by finding ratio of percentage change in quantity to percentage change in price.
Price elasticity = (% change in quantity demanded) ÷ (%change in price)
Change in quantity demanded = (480-420) ÷420 = 0.143
Change in price = (28-24) ÷ 24 = 0.167
Price elasticity = 0.143 ÷ 0.167 = 0.87
