Exhibit 5-8 Supply and demand curves for good X

-As shown in Exhibit 5-8, the price elasticity of demand for good X between points E and Z is:
A) 3/13 = 0.23.
B) 13/3 = 4.33.
C) 1/3 = 0.33.
D) 1.

Question

Exhibit 5-8 Supply and demand curves for good X
​ 
-As shown in Exhibit 5-8, the price elasticity of demand for good X between points E and Z is:
A) 3/13 = 0.23. 
B) 13/3 = 4.33. 
C) 1/3 = 0.33. 
D) 1.

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Between points E and Z, the price decreases by 13% and the quantity demanded increases by 3%. Therefore, the price elasticity of demand is 3/13 = 0.23.

Exhibit 5-8 Supply and Demand Curves for Good X