Question

PLEASE HELP !!!!!

Calculate the time price elasticity of demand if people reduce their physician visits by 20% when the travel time to get to the nearest physician is increased from 15 to 45 minutes

Answer 1

-10%

Explanation:

price elasticity of demand = % change in demand / % change in price

Here, the "price" changes from 15 to 45, so its percent change is ...

((new value)/(old value) -1) × 100%

= (45/15 -1) × 100%

= 200%

The % change in demand is given as -20%, so the price elasticity is ...

price elasticity of demand = (-20%)/(200%) = -0.10 = -10%