Market demand is given as QD = 100 - P.Market supply is given as QS = 4P.If price increases from $70 to $74,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 quantity demanded decreases from 30 to 26 when the price increases from $70 to $74. The percentage change in quantity demanded is (26 - 30) / 30 = -0.133. The percentage change in price is (74 - 70) / 70 = 0.057. Therefore, the price elasticity of demand is -0.133 / 0.057 = -2.33.

Market Demand Is Given as QD = 100 - P