Shoppers Buy Less While Prices Rise

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. The percentage change in quantity demanded equals the percentage change in total revenue minus the percentage change in price, which equals 13.3% – 29.4%, a decrease of 16.1%, so the price elasticity of demand is 16.1%/29.4% = 0.55.

When the price of avocadoes rises by 29.4 percent, total revenue increases by 13.3 percent, so it must be the case that the percentage decrease in quantity demanded is less than the percentage increase in price. Demand is inelastic.