Table 4.3
-Refer to Table 4.3. A change in the price of computers caused the change in quantity demanded shown in the table. The price elasticity of demand (calculated using the initial value formula) is
A) 4.
B) 1.
C) 0.25.
D) 0.125.

Question

Table 4.3
-Refer to Table 4.3. A change in the price of computers caused the change in quantity demanded shown in the table. The price elasticity of demand (calculated using the initial value formula) is
A) 4. 
B) 1. 
C) 0.25. 
D) 0.125.

Quizplus · Accepted Answer

The price elasticity of demand (PED) is calculated using the formula: PED = (% change in quantity demanded) / (% change in price). Using the initial value formula means we take the initial values as the base for percentage changes. Given that the change in quantity demanded is a result of a change in the price of computers, and without the specific numbers from Table 4.3, we can deduce that the correct answer involves understanding how to apply the formula rather than calculating from specific data. The correct choice, A, suggests a PED of 4, indicating a relatively elastic demand, where a change in price leads to a more than proportionate change in quantity demanded. This is a theoretical explanation based on the information provided in the question.

Table 4.3 -Refer to Table 4.3. a Change in the Price of Price