NARRBEGIN: Exhibit 5-26
Exhibit 5-25

-Refer to exhibit 5-25. Between points B and C price elasticity of demand is:

Question

NARRBEGIN: Exhibit 5-26
Exhibit 5-25
 
-Refer to exhibit 5-25. Between points B and C price elasticity of demand is:

Quizplus · Accepted Answer

Between points B and C, the price has increased from $10 to $12 and the quantity demanded has decreased from 50 to 45 units. Using the formula for price elasticity of demand, we get:

Price elasticity of demand = (percentage change in quantity demanded) / (percentage change in price)
= [(45-50)/((45+50)/2)] / [(12-10)/((12+10)/2)]
= -5.26

Since the elasticity value is greater than 1, the demand is elastic. Therefore, the best choice is B) elastic.

NARRBEGIN: Exhibit 5-26 Exhibit 5-25