Answer to Question #138490 in Microeconomics for Sevin Karabulut

Question

Price is £30. Quantity is 200. Price increases to £33, Quantity falls to 100.
my answer was 5 therefore it is elastic demand.
But in my test I got the question on price elasticity of demand wrong so I want to double check this is right before I send it to my teacher to make up for the test

Answer 1

solution

price elasticity of demand=(%change in quantity )/ (%change in price)

% change in quantity$(\Delta Q)=\frac{(200-100)}{200}\times100=50$ %

%change in price$(\Delta P)=\frac{(33-30)}{30}\times100=10$ %

so

so price elasticity of demand $=$ $\frac{50}{10}=5$

so price elasticity of demand is 5 .