Exhibit 20-3

-Refer to Exhibit 20-3.When price decreases from $4.50 to $3.50,the price elasticity of demand is
A) 0.4375.
B) 0.50.
C) 1.0.
D) 2.00.
E) 2.86.

Question

Exhibit 20-3
 
-Refer to Exhibit 20-3.When price decreases from $4.50 to $3.50,the price elasticity of demand is
A) 0.4375. 
B) 0.50. 
C) 1.0. 
D) 2.00. 
E) 2.86.

Quizplus · Accepted Answer

The price elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). If the elasticity is greater than 1, it indicates elastic demand. In this case, the calculated elasticity is 2.00, indicating that the demand is elastic when the price decreases from $4.50 to $3.50.

Exhibit 20-3 -Refer to Exhibit 20-3.When Price Decreases from $4.50 to $3.50,the