Refer to the above data.What is the elasticity of demand between the prices of $3 and $2?
A) 0.22
B) 0.40
C) 0.56
D) 1.22 The change in quantity is (400 - 500)/(400 + 500)= 0.111 and the change in price is (2 - 3)/(2 + 3)= 0.20.Thus,elasticity is 0.56.

Question

Refer to the above data.What is the elasticity of demand between the prices of $3 and $2?
A) 0.22 
B) 0.40 
C) 0.56 
D) 1.22 The change in quantity is (400 - 500)/(400 + 500)= 0.111 and the change in price is (2 - 3)/(2 + 3)= 0.20.Thus,elasticity is 0.56.

Quizplus · Accepted Answer

The elasticity of demand between the prices of $3 and $2 is 0.56, which indicates that the demand is relatively elastic. Therefore, if the seller wants to increase their revenue, they should lower the price since the increase in quantity demanded will compensate for the decrease in the price, resulting in a net gain in revenue.

Refer to the Above Data