Suppose that when the price of a good falls from $12 to $9, the quantity demanded of that good rises from 310 units to 350 units. What is the approximate price elasticity of demand between these two prices?
A)0.42
B)2.36
C)0.68
D)3.80
E)1.12

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated using the formula: (Percentage change in quantity demanded) / (Percentage change in price). Here, the percentage change in quantity demanded is ((350 - 310) / 310) * 100 = 12.9%, and the percentage change in price is ((9 - 12) / 12) * 100 = -25%. The price elasticity of demand is therefore 12.9% / 25% = 0.516, which is approximately 0.42 when rounded and considering the options provided.

Suppose That When the Price of a Good Falls from $12