The price and quantity demanded of a particular smartphone app are shown in the table below.

$\begin{array} { | l | c | c | c | c | c | c | c | c | }
\hline \begin{array} { l }
\text { Price } \
\text { (\$ per download) }
\end{array} & \$ 0 & \$ 1 & \$ 2 & \$ 3 & \$ 4 & \$ 5 & \$ 6 & \$ 7 \
\hline \begin{array} { l }
\text { Quantity Demanded } \
\text { (millions of downloads) }
\end{array} & 7 & 6 & 5 & 4 & 3 & 2 & 1&0 \
\hline
\end{array}$
-Between prices $3 and $4,the numerical value of the price elasticity of demand is:
A)0.08
B)7.0
C)0.17
D)13.0
E)1.0

Question

The price and quantity demanded of a particular smartphone app are shown in the table below.

$\begin{array} { | l | c | c | c | c | c | c | c | c | } 
\hline \begin{array} { l } 
\text { Price } \
\text { (\$ per download) }
\end{array} & \$ 0 & \$ 1 & \$ 2 & \$ 3 & \$ 4 & \$ 5 & \$ 6 & \$ 7 \
\hline \begin{array} { l } 
\text { Quantity Demanded } \
\text { (millions of downloads) }
\end{array} & 7 & 6 & 5 & 4 & 3 & 2 & 1&0 \
\hline
\end{array}$
-Between prices $3 and $4,the numerical value of the price elasticity of demand is:
A)0.08
B)7.0
C)0.17
D)13.0
E)1.0

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Between $3 and $4, the quantity demanded changes from 4 million to 3 million (a 25% decrease), and the price changes from $3 to $4 (a 33.33% increase). The elasticity is 25% / 33.33% = 0.75, which is closest to 1.0 when rounded.

The Price and Quantity Demanded of a Particular Smartphone App