Market demand is given as QD = 220 - 4P.Market supply is given as QS = 2P + 40.If price increases from $50 to $53,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 $50 to $53, a 6% increase. The quantity demanded decreases from 120 to 114, a 5% decrease. Therefore, the price elasticity of demand is -5% / 6% = -0.83. The closest answer choice is D) 14.7.

Market Demand Is Given as QD = 220 - 4P