Answer:
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Determine the price elasticity of demand for a microwave that experienced a 20% drop in price and a 50% increase in weekly quantity demanded.
Based on the calculations, the price elasticity of demand for a microwave is equal to 2.5.
What is the price elasticity of demand?The price elasticity of demand can be defined as a measure of the responsiveness of the quantity demanded by a consumer with respect to a specific change in price of the product, all things being equal (ceteris paribus).
Mathematically, the price elasticity of demand can be calculated by using the following formula;
Price elasticity of demand = (Q₂ - Q₁)/[(Q₂ + Q₁)/2]/(P₂ - P₁)/[(P₂ + P₁)/2]
Price elasticity of demand = Percentage change in quantity demanded)/(Percentage change in price)
Substituting the given parameters into the formula, we have;
Price elasticity of demand = 50/20
Price elasticity of demand = 2.5
In this context, we can reasonably infer and logically deduce that the price elasticity of demand for a microwave is equal to 2.5.
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