The price elasticity of a demand has the formula
[tex]Price \ Elasticity= \frac{ \frac{D1-D2}{D1+D2} }{ \frac{P1-P2}{P1+P2} } [/tex]
where D is demand and P is price. Based on the given:
D2= 1.15D1 ; P2 = 1.2P1
Upon simplifying
[tex]Price \ Elasticity= \frac{ \frac{D1-1.15D1}{D1+1.15D1} }{ \frac{P1-1.2P1}{P1+1.2P1} } [/tex]
Price Elasticity = 0.7674 or 76.74%
The variables D1 and P1 are cancelled out, and then you can obtain the answer.
