Theta, Inc., sells three different products. The following information is provided by Theta: $\begin{array}{lrrrr}
&&&\text { Sales Quantity }&\text { Sales Quantity }\
\text { Product } & \text { Old Price } & \text { New Price } &\text { (at old price) }&\text { (at NEW price) }\
\text { Alpha } & \$ 20.00 & \$ 25.00 & 5,000 & 5,100 \
\text { Beta } & 10.00 & 5.00 & 8,000 & 14,000 \
\text { Gamma } & 40.00 & 39.00 & 900 & 850
\end{array}$ Which of the following is the price elasticity of demand for the product Beta? (Give the answer to one decimal place.)
A)?1.5
B)1.2
C)?2.2
D)2.5

Question

Quizplus · Accepted Answer

The price elasticity of demand for product Beta is calculated as follows:Price elasticity of demand = (% change in quantity demanded) / (% change in price)% change in quantity demanded = (14,000 - 8,000) / 8,000 = 0.75% change in price = (5 - 10) / 10 = -0.5Price elasticity of demand = 0.75 / -0.5 = -1.5Therefore, the price elasticity of demand for product Beta is -1.5, which is closest to choice A.

Theta, Inc Which of the Following Is the Price Elasticity of Demand