Figure 6-2
-In Figure 6-2, the price elasticity of demand (dropping all minus signs) is ____ between P = 4 and P = 6 than between P = 10 and P = 12 because between the lower set of prices the percentage change in price is ____.
A)smaller; smaller
B)smaller; greater
C)greater; smaller
D)greater; greater

Question

Figure 6-2 
-In Figure 6-2, the price elasticity of demand (dropping all minus signs) is ____ between P = 4 and P = 6 than between P = 10 and P = 12 because between the lower set of prices the percentage change in price is ____.
A)smaller; smaller 
B)smaller; greater 
C)greater; smaller 
D)greater; greater

Quizplus · Accepted Answer

The elasticity is calculated by dividing the percentage change in quantity by the percentage change in price. The percentage change in price between P=4 and P=6 is [(6-4)/((6+4)/2)]*100 = 20%. The percentage change in price between P=10 and P=12 is [(12-10)/((12+10)/2)]*100 = 16.7%. Therefore, the percentage change in price is greater between P=4 and P=6, making the elasticity smaller. So, option B is the correct answer.

Figure 6-2 -In Figure 6-2, the Price Elasticity of Demand (Dropping All