Forums Economics Assignment Help Price Elasticity of demand

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    admin
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    The quantity of a good demanded rises from 1000 to 1500 units when the price falls from $1.50 to $1.00 per unit. The price elasticity of demand for this product is approximately:
    A. 1.0
    B. 0.16
    C. 2.5
    D. 4.0

    #15661

    admin
    Keymaster

    Answer: (A) 1.0
    Reason: Formula for price elasticity of demand is
    price elasticity of demand image 1
    Where Q1 is 1000 and Q2 is 1500 and P1 is $1.50 and P2 is $1.00
    (1500 – 1000) / (1000 + 1500) = 500 / 2500 = 500 * 2.5 = 12500 = ed = 1.00
    (1.00 – 1.50 ) / (1.50 + 1.00) .50 / 2.5 2500 * .50 12500

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