(Answered) Problem 3 the olde yogurt factory has reduced the price of

Accounting

Problem 3. The Olde Yogurt Factory has reduced the price of its popular Mmmm Sundae from $2.25 to $1.75. As a result, the firm's daily sales of these sundaes have increased from 1,500/day to 1,800/day. Compute the arc price elasticity of demand over this price and consumption quantity range.
Q2 = 1800
Q1 = 1500
P2 = 1.75
P1 = 2.25

EP= 1800 - 1500 = 300/1500 = .20 or 20% Q
1.75 - 2.25 = -.5/2.25 = -.22 or -22% P
EP = -0.91

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