If quantity demanded for rice falls by 4% when price increases 8%,we know that the absolute value of the own-price elasticity of rice is:
A)2.5.
B)0.5.
C)2.
D)0.40.

Question

If quantity demanded for rice falls by 4% when price increases 8%,we know that the absolute value of the own-price elasticity of rice is:
A)​2.5.
B)0.5.
C)2.
D)​0.40.

Quizplus · Accepted Answer

The own-price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is |-4%/8%| = 0.5.

If Quantity Demanded for Rice Falls by 4% When Price