Use the table below to answer the following question.
Table 4.1.2

-Refer to Table 4.1.2.The table shows two points on the demand curve for volleyballs.What is the price elasticity of demand between these two points?
A)2.5.
B)2.0.
C)0.5.
D)0.4.
E)none of the above

Question

Use the table below to answer the following question.
Table 4.1.2
 
-Refer to Table 4.1.2.The table shows two points on the demand curve for volleyballs.What is the price elasticity of demand between these two points?
A)2.5. 
B)2.0. 
C)0.5. 
D)0.4. 
E)none of the above

Quizplus · Accepted Answer

The price elasticity of demand can be calculated using the formula: 
% change in quantity demanded / % change in price.
Between the two points in the table, the price increases from $2 to $2.50, a change of 25%. The quantity demanded decreases from 200 to 150, a change of 25%. Therefore, the price elasticity of demand is:
(25% / 25%) = 1.0 in absolute value. 
Since the price elasticity of demand is always expressed as a positive number, we can say that the demand is price elastic, and the answer is B (2.0).

Use the Table Below to Answer the Following Question