If a price increase from $5 to $7 causes quantity demanded to fall from 150 to 100, what is the absolute value of the own price elasticity at a price of $7 using the arc formula?

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Business

Milagros Vaughn

11 December, 05:44

If a price increase from $5 to $7 causes quantity demanded to fall from 150 to 100, what is the absolute value of the own price elasticity at a price of $7 using the arc formula?

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Answers (1)

Know the Answer?

Haiden Lin · Answer 1

A) 1.75.

B) 5.25.

C) 0.19.

D) 2.15.

1.75

Answer: Option A.

Explanation:

With the increase in the price of a particular good, the quantity demanded of that good decreases. The price of the good therefore shares an inverse relation ship with the demand of the good. This is known as the law of demand in Economics.

But by what amount does the quantity of the good demanded by the consumer change with the change in the price of that good is known as the price elasticity of the good demanded. Whether the price change affects the demand to a huge extent or does it not affect the demand of the good too much is shown by the elasticity.