Refer to the following figure:

-When price is $10 and quantity demanded is 2,000, what is the point elasticity of demand?
A) -3
B) -1/3
C) -1
D) -5
E) -2/3

Question

Refer to the following figure:
 
-When price is $10 and quantity demanded is 2,000, what is the point elasticity of demand?
A) -3 
B) -1/3 
C) -1 
D) -5 
E) -2/3

Quizplus · Accepted Answer

Point elasticity of demand is calculated using the formula: (dQ/dP) * (P/Q). Assuming a linear demand curve, the elasticity at a point can be approximated by the ratio of percentage change in quantity to percentage change in price. Given no specific changes in price or quantity, the elasticity is often assumed to be unitary (-1) at the midpoint of a linear demand curve.

Refer to the Following Figure