Chapter 5, Problem 2.4PA

To determine

The reason for a greater price elasticity of demand for coca cola in comparison to other soft drinks.

Concept Introduction:

Price Elasticity of Demand: It is the degree of responsiveness to change in quantity demanded due to change in price level.

The formula for measuring elasticity of demand is given as follows:

  $\text{e}=\frac{\Delta \text{Q}}{\Delta \text{P}}\times \left[\frac{\frac{{\text{P}}_1+ {\text{P}}_2}{2}}{\frac{{\text{Q}}_1+ {\text{Q}}_2}{2}}\right]$

Where,

   $\Delta Q=Q_2-Q_1$

   $\Delta P=P_2-P_1$