Answer: The price elasticity of demand for eggs is -0.6. This means that when the price of eggs increases, the demand for eggs decreases by 0.6.

## Definition of Price Elasticity of Demand

Price elasticity of demand (PED) is a measure of how sensitive the demand for a product is to changes in its price. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price. PED can be either elastic, inelastic, or unitary.

## Calculation of Price Elasticity of Demand for Eggs

In this case, the original price of eggs was \$5.50 and the new price was \$6.50. The original quantity sold was 42 dozen and the new quantity sold was 38 dozen. To calculate the price elasticity of demand for eggs, we need to first calculate the percentage change in quantity demanded and the percentage change in price:

• Percentage change in quantity demanded = (38 – 42) / 42 * 100 = -9.52%
• Percentage change in price = (6.50 – 5.50) / 5.50 * 100 = 18.18%

The price elasticity of demand for eggs is then calculated by dividing the percentage change in quantity demanded by the percentage change in price:

• Price elasticity of demand for eggs = -9.52% / 18.18% = -0.6

## Conclusion

The price elasticity of demand for eggs is -0.6. This means that when the price of eggs increases, the demand for eggs decreases by 0.6.

## Related Questions

• What is price elasticity of demand?
• What is the difference between price elasticity of demand and price elasticity of supply?
• What are the factors that affect price elasticity of demand?
• What is an example of an inelastic good?
• What is an example of an elastic good?
• What is the formula for calculating price elasticity of demand?
• What is the formula for calculating price elasticity of supply?
• What is the difference between absolute and relative price elasticity?
• How can price elasticity of demand be used to predict changes in revenue?
• What is the difference between price elasticity of demand and income elasticity of demand?