A Decrease in Price and Increase in Demand for Bottled Water

Elasticity of Demand Calculation

The elasticity of demand for bottled water can be calculated based on the given information about the change in price and quantity demanded.

The formula to calculate elasticity of demand is:

Elasticity = (% change in quantity demanded) / (% change in price)

Using the given information, we can calculate the percentage changes as follows:

% change in quantity demanded = (2000 - 1500) / 1500 * 100 = 33.33%

% change in price = (40 - 45) / 45 * 100 = -11.11%

Substituting the values into the formula:

Elasticity = 33.33% / -11.11% = -3

Since the elasticity of demand is negative, indicating an inverse relationship between price and quantity demanded, we can conclude that the correct answer is not provided in the options given (E) None of the above. The elasticity of demand for bottled water is -3.

A decrease in price from R45 to R40 per bottle water leads to an increase in demand of 1500 to 2000 bottles. The elasticity of demand of bottled water is? A) 0.149 B) 4.444 C) -0.149 D) -4.262 E) None of the above. The elasticity of demand for bottled water is -3.
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