Question

“The table above gives the demand schedule for pears. Between point C and point D. the price elasticity of demand is"

Answer 1

The elasticity of demand can be calculated by dividing the percentage change in the quantity demanded of a good or service by the percentage change in price.

The data for point C are: Price=$6, Quantity=8

The data for point D are: Price=$4, Quantity=12

The percent change in the quantity demanded is:

`\begin{gathered} pc1=(12-8)/(8) \\ pc1=(4)/(8) \\ pc1=0.5 \end{gathered}`

We calculated the ratio instead of the percentage, but it will work fine.

The percent change in price is:

`\begin{gathered} pc2=(4-6)/(6) \\ pc2=-(2)/(6) \\ pc2=-0.33 \end{gathered}`

The elasticity of demand is:

`\begin{gathered} e=(0.5)/(-0.33) \\ e=-1.5 \end{gathered}`

Since the absolute value of the elasticity is greater than one, the demand is said to be elastic.