If the quantity demanded of a product fell from 11,000 to 10,000 when price rose from $9 to $10, the price elasticity of demand over this range is equal to approximately
A) − 0.1.
B) − 0.05.
C) − 0.9.
D) − 1.1.

Question

Quizplus · Accepted Answer

To calculate price elasticity of demand, we use the following formula:

Price Elasticity of Demand = ((Q2-Q1) / ((Q2+Q1)/2)) / ((P2-P1) / ((P2+P1)/2))

Using the given values:

Q1 = 11000
Q2 = 10000
P1 = 9
P2 = 10

Price Elasticity of Demand = ((10000-11000) / ((10000+11000)/2)) / ((10-9) / ((10+9)/2))
Price Elasticity of Demand = (-1000 / 10500) / (1 / 9.5)
Price Elasticity of Demand = (-0.0952...) / 0.1053...
Price Elasticity of Demand ≈ -0.9

Therefore, the correct answer is C.

If the Quantity Demanded of a Product Fell from 11,000