When the price of a bar of chocolate is $2,Sharon consumes 10 chocolates.If her arc elasticity of demand for chocolates is −1,how many bars of chocolates will she consume when the price increases to $4?
A) 5
B) 6
C) 8
D) 9

Question

Quizplus · Accepted Answer

The arc elasticity of demand formula is (Q2 - Q1) / [(Q2 + Q1)/2] / (P2 - P1) / [(P2 + P1)/2], where Q1 and Q2 are the initial and final quantities, and P1 and P2 are the initial and final prices. Given an elasticity of -1, and initial Q1=10, P1=$2, and final P2=$4, solving for Q2 gives 5.

When the Price of a Bar of Chocolate Is $2,Sharon