Question

If the price elasticity of demand for tractors priced between $4,000 and $6,000 is -0.75 (using the mid-point method), what will be the percentage change in quantity demanded when the price for tractors falls from $6,000 to $4,000?

Answer 1

0.75 = % change in Qd/[(4,000 − 6,000)/(4,000 + 6,000)/2)]

-0.75 = % change in Qd/-0.4

(-0.4) × -0.75 = % change in Qd

0.3 × 100 = % change in Qd

30 percent = % change in Qd