If Price Declines from $450 to $350 And,as a Result,quantity

question 84

Multiple Choice

If price declines from $450 to $350 and,as a result,quantity demanded rises from 1200 to 1500,price elasticity of demand is:

• A) 1.78.
• B) 0.89.
• C) 1.12.
• D) 3.42.
• The change in quantity is (1500 - 1200)/(1500 + 1200)= 0.011 and the change in price is (350 - 450)/(350 + 450)= 0.125.Thus,elasticity is 0.89,which is inelastic.

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