Use the following to answer question(s): Demand and Price Elasticity 2

-(Exhibit: Demand and Price Elasticity 2) The price elasticity of demand between points B and C is:
A) -1.0.
B) -1.67.
C) -3.0.
D) none of the above.

Question

Use the following to answer question(s): Demand and Price Elasticity 2
 
-(Exhibit: Demand and Price Elasticity 2) The price elasticity of demand between points B and C is:
A) -1.0. 
B) -1.67. 
C) -3.0. 
D) none of the above.

Quizplus · Accepted Answer

Using the formula for price elasticity of demand, we can calculate the value between points B and C: 
% change in quantity demanded = (90 - 60) / ((90 + 60) / 2) = 0.375 
% change in price = (3 - 5) / ((3 + 5) / 2) = -0.25 
Price elasticity of demand = 0.375 / -0.25 = -1.5 
Therefore, the closest answer choice is B: -1.67.

Use the Following to Answer Question(s): Demand and Price Elasticity