A Firm Is Observed Using 15 Units of Input X

question 190

Multiple Choice

A firm is observed using 15 units of input X when the price of X is $2. If the price of X increases to $4, the firm uses only 6 units of it. What is the price elasticity of demand for input X? (Use the simple formula for percentage change: [(new# −old#) /old#] × 100%.)

• A)1/2 = 0.5
• B)3/5 = 0.6
• C)5/3 = 1.67
• D)2

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Definitions:

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