When the price of a pair of gloves is $21,the quantity demanded is 600 pairs.When the price of a pair of gloves is $15,the quantity demanded is 1,000 pairs.Calculate the price elasticity of demand when the price of a pair of gloves is $18.
A)1.5
B)0.67
C)66.7
D)0.015
E)1.0

Question

Quizplus · Accepted Answer

The price elasticity of demand (PED) is calculated using the formula: PED = (% change in quantity demanded) / (% change in price). From $21 to $15, the price decreases by $6, and the quantity demanded increases from 600 to 1000 pairs, which is a change of 400 pairs. The average price is ($21 + $15) / 2 = $18, and the average quantity demanded is (600 + 1000) / 2 = 800 pairs. The % change in quantity demanded is (400 / 800) * 100 = 50%, and the % change in price is ($6 / $18) * 100 = 33.33%. Therefore, PED = 50% / 33.33% = 1.5.

When the Price of a Pair of Gloves Is $21,the