The owner of a produce store found that when the price of a head of lettuce was raised from 50 cents to $1,the quantity sold per hour fell from 18 to 8.The arc elasticity of demand for lettuce is
A)-0.56.
B)-1.15.
C)-0.8.
D)-1.57.

Question

Quizplus · Accepted Answer

The arc elasticity of demand is calculated using the formula: $E_d = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}}$. The percent change in quantity demanded is $\frac{8 - 18}{(8 + 18)/2} = -10/13$, and the percent change in price is $\frac{1 - 0.5}{(1 + 0.5)/2} = 0.5/0.75$. So, $E_d = \frac{-10/13}{0.5/0.75} = \frac{-10/13}{2/3} = \frac{-10}{13} * \frac{3}{2} = -15/13 = -1.15$.

The Owner of a Produce Store Found That When the Price