Suppose that the price of a product increased from $18 to $22,and the quantity demanded decreased from 63 to 57.What is the value of the price elasticity of demand?
A)0.43.
B)0.5.
C)1.5.
D)2.0.
E)2.3.

Question

Quizplus · Accepted Answer

The price elasticity of demand (PED) is calculated using the formula: PED = (% Change in Quantity Demanded) / (% Change in Price). Here, the % change in quantity demanded is (57 - 63) / 63 = -0.095 (or -9.5%), and the % change in price is (22 - 18) / 18 = 0.222 (or 22.2%). Therefore, PED = -0.095 / 0.222 ≈ -0.43 (in absolute value, since elasticity is often considered as a positive number, the correct answer is 0.43).

Suppose That the Price of a Product Increased from $18