As the price for a particular product changes, the quantity of the product demanded changes according to the following schedule:
Total Quantity demanded / Price per unit
100 / $50
150 / 45
200 / 40
225 / 35
230 / 30
32 / 25
a. 0.20
b. 0.88
c. 10.00
d. 5.00
Answer: b
Total Quantity demanded / Price per unit
100 / $50
150 / 45
200 / 40
225 / 35
230 / 30
32 / 25
Using the arc method, the price elasticity of demand for this product when the price decreases from $40 to $35 is
a. 0.20
b. 0.88
c. 10.00
d. 5.00
Answer: b