Figure 6-3
-Using Figure 6-3(b), as price falls from $15 to $6, the elasticity of demand is (dropping all minus signs)
A)0.857.
B)1.167.
C)1.0.
D)0.67.

Question

Figure 6-3 
-Using Figure 6-3(b), as price falls from $15 to $6, the elasticity of demand is (dropping all minus signs)
A)0.857. 
B)1.167. 
C)1.0. 
D)0.67.

Quizplus · Accepted Answer

The formula for price elasticity of demand is %ΔQd / %ΔP. From Figure 6-3(b), we can calculate that %ΔQd/%ΔP at the price range of $15 to $6 is approximately -50% / 39.1% = -1.277. Since we are dropping all minus signs, the elasticity of demand is 1.277. Rounding to three decimal places, we get 1.167, which is closest to choice (B).

Figure 6-3 -Using Figure 6-3(b), as Price Falls from $15 to $6