With a rise in the price of digitally streamed music from $0.50 to $1.00 per song,the number of songs bought falls from 3 million to 1 million.Hence the numerical value of the price of elasticity of demand for this product is:
A)1.50
B)4.00
C)2.00
D)1.33
E)0.67

Question

Quizplus · Accepted Answer

Price elasticity of demand = (Percentage change in quantity demanded) / (Percentage change in price)= ((1 million - 3 million) / 1 million) / ((1.00 - 0.50) / 0.50)= -2 / 1= -2Therefore, the numerical value of the price elasticity of demand for this product is 2.

With a Rise in the Price of Digitally Streamed Music