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Question

when the loacal grocvery store puts cereal on sale, reducing its prie form 4.40 per item to 3.40 per item, the quanitiy sold increases from 220 per week to 230 per week

Answer

The price elasticity of demand for the cereal at the local grocery store is 0.17, which means that it is considered to be relatively inelastic. To calculate price elasticity of demand, we use the formula % change in quantity divided by % change in price. To obtain % change in price, we subtract the original price (P1) from the new price (P2) and then divide by the average of the two prices. We then multiply this figure by 100%. To calculate % change in quantity, we subtract the original quantity sold (Q1) from the new quantity sold (Q2) and then divide by the average of the two quantities. Again, we multiply this figure by 100%. Finally, we divide % change in quantity by % change in price to find price elasticity of demand. Using the given parameters in the problem, we can calculate that % change in price is -25.64% and % change in quantity is 4.44%. Therefore, the price elasticity of demand is 0.17 (4.44% / -25.64%). For more information on price elasticity of demand, please see the following link: brainly.com/question/15308590 #SPJ4