Answer:€ = (ΔQ/Q) / (ΔP/P)
In this case, the change in quantity demanded is $70 (from $700 to $630), and the change in price is $5 (from $20 to $15).
Using the values:
€ = ($70/$700) / ($5/$20)
€ = (0.1) / (0.25)
€ = 0.4
Therefore, the price elasticity of demand for Adam's product is 0.4.
Explanation:To calculate the price elasticity of demand, we use the formula:
€ = (ΔQ/Q) / (ΔP/P)
In this case, the change in quantity demanded is $70 (from $700 to $630), and the change in price is $5 (from $20 to $15).
Plugging these values into the formula:
€ = ($70/$700) / ($5/$20)
€ = 0.1 / 0.25
€ = 0.4
Hence, the price elasticity of demand for Adam's product is 0.4.