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Calculation of Price Elasticity: Change in quantity demanded: 150200=50150 200 = -50150200=50 Change in price: 7060=1070 60 = 107060=10 Average price: (60+70)/2=65(60 + 70) / 2 = 65(60+70)/2=65 Average quantity: (200+150)/2=175(200 + 150) / 2 = 175(200+150)/2=175 Price Elasticity: (50/10)(65/175)=1.86( -50 / 10 ) * ( 65 / 175 ) = -1.86(50/10)(65/175)=1.86 This calculation shows that the demand for the jacket is elastic since the elasticity coefficient is greater than 1 in absolute value

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Proportion of Income: Products that take up a significant portion of a consumers budget are more likely to be elastic, as price changes can greatly affect purchasing decisions

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