Market demand is given as QD = 70 - P.Market supply is given as QS = 3P.If price increases from $30 to $34,what is the price elasticity of demand?

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. In this case, the price increases from $30 to $34, a 13.33% increase. The quantity demanded decreases from 40 to 36, a 10% decrease. Therefore, the price elasticity of demand is 10% / 13.33% = 0.75, which is closest to choice C, 1.1.

Market Demand Is Given as QD = 70 - P