If, as the price of good Y rises from $5.00 to $5.75, the quantity demanded of good Y falls from 54 units to 48 units, price elasticity of demand for good Y in this price range is
A)1.05.
B)1.19.
C)0.37.
D)4.77.
E)0.84.

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). The percentage change in quantity demanded is ((48-54)/54) * 100 = -11.11%, and the percentage change in price is ((5.75-5.00)/5.00) * 100 = 15%. The elasticity is |-11.11% / 15%| = 0.74, which is closest to 0.84.

If, as the Price of Good Y Rises from $5