Final answer:
To calculate the elasticity of demand (Ed) between two price points, we need the percentage change in quantity demanded and the percentage change in price. The student's question lacks the data on quantity demanded for P1 and P2, which is required to perform the calculation. Based on an example from Chapter 5, it's demonstrated how Ed could be calculated if the quantity data were given.
Step-by-step explanation:
To calculate elasticity of demand (Ed) between two points, we use the formula:
Ed = (Percentage change in quantity demanded) / (Percentage change in price)
However, the student's question does not provide the change in quantity demanded, only the change in price. Typically, we would need to know the initial and final quantities demanded (Qd) to calculate the percentage change in quantity, just like in the example given from Chapter 5, where the price rises from $70 to $80 and Qd decreases from 2,800 to 2,600. If we follow the example provided, the percentage change in quantity and in price can be calculated and then used to find the price elasticity of demand. Without the quantity demanded data for P1 = $30 and P2 = $25, we cannot calculate Ed.
If the quantities were provided, the calculation would look something like this:
% Change in Quantity = (Qd2 - Qd1) / ((Qd1 + Qd2) / 2)
% Change in Price = (P2 - P1) / ((P1 + P2) / 2)
Ed = (Percentage change in quantity demanded ) / (Percentage change in price)