Final answer:
The price of hand calculators falls from $10 to $9 leading to an increase in quantity demanded from 100 to 125. Calculating the percentage change in price (10%) and the percentage change in quantity demanded (25%) indicates the demand is elastic.
Step-by-step explanation:
When the price of hand calculators falls from $10 to $9, there is a $1 decrease in price. Simultaneously, the quantity demanded increases from 100 to 125 calculators. This scenario represents a basic principle of economics where a decrease in price leads to an increase in quantity demanded. To analyze this change, we can calculate the percentage change in price and the percentage change in quantity demanded to determine the price elasticity of demand for hand calculators.
To calculate the percentage change in price:
((Old Price - New Price) / Old Price) * 100
(($10 - $9) / $10) * 100 = 10%
And for the percentage change in quantity demanded:
((New Quantity - Old Quantity) / Old Quantity) * 100
((125 - 100) / 100) * 100 = 25%
Since the percentage change in quantity demanded (25%) is greater than the percentage change in price (10%), it suggests that the demand for hand calculators in this case is elastic.