Question

14. When the price decreases from $6 to $4 and the quantity demanded increases by 2 units, the price elasticity of demand is

[A] -25.
[B] -1.5.
[C] -5.
[D] -2.5.
[E] Cannot be determined from the information given.

Answer 1

[E] Cannot be determined from the information given.

Step-by-step explanation:

To be able to calculate the elasticity in the demand we have to know at least 4 data, which are current price and previous price and current quantity and previous quantity, with that we can obtain the percentage of variation and with both percentages we can calculate the price elasticity of demand. Here we have the previous and current price and the dferrence in quantity, but as we don't have the previous nor the current quantity, we can't calculate the porcentage of variation in quantity.

Elasticity price = ((Q2-Q1)/Q1)/((P2-P1)/P1)