The initial price for an item is $5.00,and the quantity demanded is 350 units.When the price is raised to $5.25,the quantity demanded falls to 300 units.The absolute value of the point elasticity of demand is _____.
A)2.25
B)2.86
C)3.5
D)4.05
E)5.75

Question

Quizplus · Accepted Answer

The point elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). The percentage change in quantity demanded is ((300 - 350) / 350) = -0.1429, and the percentage change in price is ((5.25 - 5.00) / 5.00) = 0.05. The absolute value of the elasticity is |-0.1429 / 0.05| = 2.86.

The Initial Price for an Item Is $5