FIGURE 4-2
-Refer to Figure 4-2.In diagram 1,the elasticity of demand over the price range $12 to $14 is
A)0.
B)less than 1.
C)1.
D)greater than 1.
E)infinity.

Question

FIGURE 4-2
-Refer to Figure 4-2.In diagram 1,the elasticity of demand over the price range $12 to $14 is
A)0. 
B)less than 1. 
C)1. 
D)greater than 1. 
E)infinity.

Quizplus · Accepted Answer

From the graph, we can see that as price increases from $12 to $14, the quantity demanded decreases from 250 to 200. The elasticity of demand is calculated by:
% Change in Quantity Demanded / % Change in Price
= ((200-250)/((200+250)/2)) / ((14-12)/((14+12)/2))
= (-50/225) / (2/13)
= -0.444 * 6.5
= -2.89
Since the result is greater than 1, the elasticity of demand is greater than 1.

FIGURE 4-2 -Refer to Figure 4-2.In Diagram 1,the Elasticity of Demand Over