If the price of corn falls by 25 percent on world markets,causing American corn consumption to increase by 10 percent,ceteris paribus,the price elasticity of demand for corn in the United States would be
A)2.50.
B)0.75.
C)0.40.
D)0.30.

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. Here, it is 10% / 25% = 0.40.

If the Price of Corn Falls by 25 Percent on World