The price of soccer balls increases from $35 to $40, and as a result, the quantity demanded decreases from 250 to 200. Over this price range,
A) demand is elastic.
B) demand is inelastic.
C) demand is of unitary elasticity.
D) there is insufficient information to determine the price elasticity of demand.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, the percentage change in quantity demanded is -20% (from 250 to 200), and the percentage change in price is approximately 14.29% (from $35 to $40). The elasticity is approximately -1.4, which is greater than 1 in absolute value, indicating elastic demand.

The Price of Soccer Balls Increases from $35 to $40