When the price of tacos rises 4 percent,the quantity demanded decreases 10 percent.What is the price elasticity of demand for tacos?
A)40.0
B)25.0
C)0.4
D)2.5
E)10.0

Question

Quizplus · Accepted Answer

Price elasticity of demand (% change in quantity demanded / % change in price) is calculated by dividing the percentage change in quantity demanded (10%) by the percentage change in price (4%):
 
Price elasticity of demand = 10% / 4% = 2.5

Therefore, the best choice is D) 2.5.

When the Price of Tacos Rises 4 Percent,the Quantity Demanded