Question

Question 4
"If price falls from $250 to $200, what is the elasticity of demand over this range?"
0 -0.67
O-1
-0.08
-1.5​

Answer 1

Answer:

-0.05 is the right answer

Answer 2

The elasticity of demand over this range is -1.5

Explanation:

The question is incomplete so the table is shown below:

Price      Quantity demanded

$250      1500

$200      2100

$150      2700

The computation of the price elasticity of demand using mid point formula is shown below:

= (change in quantity demanded ÷ average of quantity demanded) ÷ (percentage change in price ÷ average of price)

where,  

Change in quantity demanded is

= Q2 - Q1

= 2,100 - 1,500

= 600

And, average of quantity demanded would be

= (2,100 + 1,500) ÷ 2

= 1,800

Change in price would be

= P2 - P1

= $200 - $250

= -$50

And, average of price is

= ($200 + $250) ÷ 2

= 225

So, after solving this, the price elasticity of demand is -1.5

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