Respuesta :

meerkat18
The price elasticity of a demand has the formula 

[tex]Price \ Elasticity= \frac{ \frac{D1-D2}{D1+D2} }{ \frac{P1-P2}{P1+P2} } [/tex]

where D is demand and P is price. Based on the given:

D2= 1.15D1  ;  P2 = 1.2P1

Upon simplifying

[tex]Price \ Elasticity= \frac{ \frac{D1-1.15D1}{D1+1.15D1} }{ \frac{P1-1.2P1}{P1+1.2P1} } [/tex]

Price Elasticity = 0.7674 or 76.74%

The variables D1 and P1 are cancelled out, and then you can obtain the answer.

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