| Demanded | |
| 8 | 10 |
| 6 | 12 |
If we move from 8 to 6, the elasticity of demand is_______
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Correct Answer: Option C
Explanation:
The elasticity of demand is calculated using:
Where P = PriceQ = Quantity Demanded
Therefore,
= -25%
= 20%
NOTE: Elasticity of demand is always positive. Therefore, the negative sign is ignored or In extra negative sign is introduced to make it positive. So the answer is 1.25
The elasticity of demand is calculated using:
| Ïd | = | % Δ in P[hr] % Δ in Q |
Where P = PriceQ = Quantity Demanded
Therefore,
| % | Δ | in | P | = | 6 - 8[hr] 8 | x | 100 |
| % | Δ | in | Q | = | 12 - 10[hr] 10 | x | 100 |
| Ïd | = | -25[hr] 20 | = | -1.25 | = | 1.25 |
NOTE: Elasticity of demand is always positive. Therefore, the negative sign is ignored or In extra negative sign is introduced to make it positive. So the answer is 1.25