When the price of football ticket is $100, Eric buys four tickets each year. When the price is $90, he buys six tickets each year. What is Eric's price elasticity of demand when price decreases?
A) 5
B) 0.2
C) 3
D) 1.5

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. In this case, the price decreases from $100 to $90, a decrease of 10%. The quantity demanded increases from 4 to 6, an increase of 50%. Therefore, the price elasticity of demand is 50% / 10% = 5.

When the Price of Football Ticket Is $100, Eric Buys