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kenny6666 [7]
4 years ago
12

Suppose that when the price of a good is $15, the quantity demanded is 40 units, and when the price falls to $6, the quantity in

creases to 60 units. The price elasticity of demand near a price of $6 and a quantity of 60 can be calculated as:
A.-5/6
B.-2
C.-2/9
D.-9/2
Business
1 answer:
Paraphin [41]4 years ago
8 0

Answer:

(A) -5/6

Explanation:

Price elasticity of demand = % change in quantity demanded ÷ % change in price

% change in quantity demanded = (60-40)/40 × 100 = 20/40 × 100 = 50%

% change in price = ($6-$15)/$15 × 100 = -$9/$15 × 100 = -60%

Price elasticity of demand = 50% ÷ -60% = -5/6

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