Answer: In order to answer this question, a table showing different prices and quantities demanded of sugar-free gummy bears and of ordinary gummy bears will be added in the explanation section.
Explanation: from the table we can see that the quantities that correspond to $2.65 and $3.05 are 175 and 157 respectively for sugar-free gummy bears, and 379 and 273 respectively for ordinary gummy bears.
Using the midpoint formula, we will calculate thus:
Price Elasticity of demand for sugar-free gummy bears.
P2 - P1/(P2 + P1/2)
= 3.05 - 2.65/(3.05 + 2.64/2)
= 0.4/2.85
= 0.14
For sugar-free gummy bears:
Q2 - Q1/(Q2 + Q1/2)
= 157 - 175/(157 + 175/2)
= -18/166
= -0.11
Price elasticity = change in quantity demanded/change in price
= -0.11/0.14
= -0.8
For ordinary gummy bears:
Q2 - Q1/(Q2 + Q1/2)
= 273 - 379/(273 + 379/2)
= -106/326
= -0.33
Price elasticity = -0.33/0.14
= -2.4
From the calculations above, we can see that their price elasticities are negative i.e. -0.8 and -2.4, this means that quantity demanded reduced when price increased, and that the demand for both types of gummy bears was elastic.
