Using Average Price and Average Quantity, Calculate the Price Elasticity

question 438

Multiple Choice

Using average price and average quantity, calculate the price elasticity of demand if a price rise from $8 to $10 and decreases the quantity demanded from 20 units to 15 units. The price elasticity of demand equals

• A) 2.5.
• B) 1.29.
• C) 0.78.
• D) 0.06