Exhibit 19-3

-Refer to Exhibit 19-3. When price decreases from $4.50 to $3.50, the price elasticity of demand is
A)0.4375.
B)0.50.
C)1.0.
D)2.00.
E)2.86.

Question

Exhibit 19-3
 
-Refer to Exhibit 19-3. When price decreases from $4.50 to $3.50, the price elasticity of demand is
A)0.4375. 
B)0.50. 
C)1.0. 
D)2.00. 
E)2.86.

Quizplus · Accepted Answer

The price elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). If the elasticity is greater than 1, it indicates elastic demand. The given options suggest that the correct calculation results in an elasticity of 2.00, indicating a relatively elastic demand.

Exhibit 19-3 -Refer to Exhibit 19-3. When Price Decreases from $4.50 to Decreases