Applications: Trigonometry
Trigonometry: Step 1/3
The price elasticity of demand is a measure of the responsiveness of quantity demanded to a change in price. In this exercise, it is given by the formula
\[ \varepsilon_D = \left | \frac{\Delta Q_D}{\Delta P} \cdot \frac{P}{Q_D} \right | \]
where #P# is the price, and #Q_D# is the quantity demanded. The price elasticity of demand tells us by how much percentage the quantity demanded changes as a result of a #1\%# increase in price.
Consider a market of candybars with a demand curve as depicted below.
The vertical axis denotes the price #P# and the horizontal axis denotes the quantity demanded #Q_D#. The demand curve is a downward-sloping line that makes an angle #\theta# with the #P#-axis.
For this market, we have #\theta = 45^{\circ}# and #\dfrac{P}{Q_D} = 1.2#.
Calculate the price elasticity of demand. Round your answer to one decimal place.
| #\varepsilon _D =# |
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