Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P x . Assume that P = $8, I = 200, and P x = $10.
-The coefficient of the price elasticity of demand is always negative.

Question

Quizplus · Accepted Answer

The coefficient of price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. As price and quantity demanded have an inverse relationship, the coefficient of price elasticity of demand is always negative.

Scenario 5.1 The Demand for Noodles Is Given by the Following Equation