-Refer to the above table. What is the absolute price elasticity of demand if a price falls from $7 to $6.50?
A) 0.85
B) 1.08
C) 1.17
D) 0.92

Question

-Refer to the above table. What is the absolute price elasticity of demand if a price falls from $7 to $6.50?
A) 0.85 
B) 1.08 
C) 1.17 
D) 0.92

Quizplus · Accepted Answer

The absolute 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 falls from $7 to $6.50, a decrease of 7.14%. The quantity demanded increases from 100 to 117, an increase of 17%. Therefore, the absolute price elasticity of demand is 17% / 7.14% = 1.17.

-Refer to the Above Table