The following question are based on the following information.
On June 1, 2014, the Pennsylvania Turnpike Commission voted to raise tolls by 30 percent.
They anticipated that traffic might initially fall by 5 percent.
-The Turnpike Commission estimates that the price elasticity of demand for travel on the highway is
A) 0.17.
B) 0.30.
C) 0.50.
D) 1.
E) 6.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is -5% (fall in traffic) / 30% (increase in tolls) = -1/6 or approximately -0.17, indicating option A is correct.

The Following Question Are Based on the Following Information