Using the average price and average quantity, what is the elasticity of demand for oranges when the price of oranges changes from $200 to $160 per tonne and as a result the quantity demanded changes from 1000 to 1400 tonnes?
A) 0.1
B) 0.67
C) 1.5
D) 10.0

Question

Quizplus · Accepted Answer

Elasticity of demand = (% change in quantity demanded) / (% change in price). The average price is $180, and the average quantity is 1200. The percentage change in quantity is (1400-1000)/1200 = 0.3333, and the percentage change in price is (160-200)/180 = -0.2222. Elasticity = 0.3333 / -0.2222 = -1.5 (absolute value is 1.5).

Using the Average Price and Average Quantity, What Is the Elasticity