Refer to the following figure.When price is $5 and quantity demanded is 3,000,what is the point elasticity of demand?
A)-3
B)-1/3
C)-1
D)-5
E)-2/3

Question

Refer to the following figure.When price is $5 and quantity demanded is 3,000,what is the point elasticity of demand? 
A)-3 
B)-1/3 
C)-1 
D)-5 
E)-2/3

Quizplus · Accepted Answer

The point elasticity of demand can be calculated using the formula: 
%ΔQ/%ΔP = (ΔQ/Q) / (ΔP/P) 
To calculate the point elasticity of demand, we need to know the price and quantity demanded at a specific point on the demand curve. In this case, when price is $5 and quantity demanded is 3,000. 
To calculate %ΔQ, we can use the formula: 
%ΔQ = ((new quantity - old quantity) / old quantity) x 100 
%ΔQ = ((3,000 - 3,001) / 3,001) x 100 
%ΔQ = -0.033%

To calculate %ΔP, we can use the formula: 
%ΔP = ((new price - old price) / old price) x 100 
%ΔP = (($5 - $6) / $6) x 100 
%ΔP = -16.67%

Now we can plug in the values to get the point elasticity: 
%ΔQ/%ΔP = (-0.033%/-16.67%) 
%ΔQ/%ΔP = 0.00198

Simplifying, we get: 
%ΔQ/%ΔP ≈ 1/505

Therefore, the point elasticity of demand is approximately 1/505, which is equivalent to answer choice B: F1F1F1S1F1F1F101/3.

Refer to the Following Figure