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 bushel and so the quantity demanded changes from 1000 to 1400 bushels?
A) 1.5
B) 0.1
C) 10.0
D) 0.67

Question

Quizplus · Accepted Answer

The elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). The percentage change in quantity demanded is (1400-1000)/((1400+1000)/2) = 0.3333, and the percentage change in price is (160-200)/((160+200)/2) = -0.2222. The elasticity is 0.3333 / -0.2222 = -1.5, which is typically expressed as an absolute value, 1.5.

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