Fred's price elasticity of demand for milk is -2 at today's prices when we measure price in dollars and quantity of milk in quarts.If the price per quart of milk stays the same but we measure quantity of milk in gallons and price in dollars, then what will be the elasticity of demand for gallons of milk? (A gallon is four quarts.)
A)-1
B)-1/2
C)-8
D)-4
E)-2

Question

Quizplus · Accepted Answer

The elasticity of demand is a unitless measure, so changing the units of measurement (from quarts to gallons) does not affect the elasticity value. It remains -2.

Fred's Price Elasticity of Demand for Milk Is -2 at Today's