Answer:
C. -0.33
Explanation:
Elasticity is a microeconomic concept that aims to measure the sensitivity of demand in the face of price changes. To calculate the price elasticity of demand, a formula is used that divides the observed change in quantity (Q) by the change in price (P).
Elasticity = ▲ Q / ▲ P
We know that the price change was 15% = 0.15
We know that the change in quantity was -5% = -0.05
So:
Elasticity = -0.05 / 0.15 = -0.33
Plus: when the value of elasticity is less than 1, we say that demand is inelastic - little price sensitive. When elasticity is greater than 1, we say that demand is elastic (price sensitive).
In this case, the demand for haircutting is inelastic.
