A recent increase in the supply of oranges caused the price to drop from $5 to $3 per bushel, and quantity demanded to rise from 10,000 bushels to 25,000 bushels. This indicates that the price elasticity of demand for oranges in this price range is
A) − 0.33.
B) − 0.58.
C) − 1.
D) − 1.71.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). The percentage change in quantity demanded is ((25,000 - 10,000) / 10,000) * 100 = 150%. The percentage change in price is ((3 - 5) / 5) * 100 = -40%. Therefore, the elasticity is 150% / -40% = -1.71.

A Recent Increase in the Supply of Oranges Caused the Price