The absolute price elasticity of demand for good X is 1.2 when price is measured in dollars. If price were measured in cents, the price elasticity elasticity of demand would equal
A) 1200
B) 12
C) 1.2
D) 0.012

Question

Quizplus · Accepted Answer

Price elasticity of demand is a unit-free measure, meaning it does not depend on the units in which price is measured. Therefore, changing the unit of price from dollars to cents does not affect the elasticity value, which remains 1.2.

The Absolute Price Elasticity of Demand for Good X Is