-The above figure shows the demand curve for movie rentals from Redbox. If Redbox raised its price from $2.50 to $3.00, between these two prices the price elasticity of demand equals
A) 1.2.
B) 0.8.
C) 2.0.
D) 0.5.

Question

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox raised its price from $2.50 to $3.00, between these two prices the price elasticity of demand equals
A) 1.2. 
B) 0.8. 
C) 2.0. 
D) 0.5.

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. If the elasticity is greater than 1, demand is elastic; if it is less than 1, demand is inelastic. An elasticity of 1.2 indicates that the demand is elastic between these two prices.

-The Above Figure Shows the Demand Curve for Movie Rentals