Refer to the following figure.When price is $10 and quantity demanded is 2,000,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 $10 and quantity demanded is 2,000,what is the point elasticity of demand? 
A)-3 
B)-1/3 
C)-1 
D)-5 
E)-2/3

Quizplus · Accepted Answer

The formula for point elasticity of demand is (% change in quantity demanded)/(% change in price). Here, we know that quantity demanded changes from 2,000 to 1,000 (a decrease of 50%) when the price increases from $10 to $20 (an increase of 100%). Plugging these values into the formula, we get:
(50%)/(-100%) = -0.5
However, we usually report elasticity as a positive value, so the answer is 0.5.

Refer to the Following Figure