The table given below reports the price and quantity demanded of a commodity.Table 6.1

-According to Table 6.1, when the price increases from $5 to $6, the price elasticity of demand is _____.
A)0.25
B)1.0
C)1.3
D)1.8
E)1.67

Question

The table given below reports the price and quantity demanded of a commodity.Table 6.1
 
-According to Table 6.1, when the price increases from $5 to $6, the price elasticity of demand is _____.
A)0.25 
B)1.0 
C)1.3 
D)1.8 
E)1.67

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 100 to 80 when the price increases from $5 to $6. The percentage change in quantity demanded is (80-100)/100 = -20%. The percentage change in price is (6-5)/5 = 20%. Therefore, the price elasticity of demand is -20%/20% = -1.0.

The Table Given Below Reports the Price and Quantity Demanded