Question

Measuring the price of gasoline in dollars, an economist calculates the price elasticity of demand to be -.5. What would the price elasticity of demand be if the economist had chosen to measure the price of gasoline in pennies rather than dollars?

A. -.005
B. .-5
C. -.05
D. -50

Answer 1

Answer:

(D) -50

Explanation:

1 dollar is equivalent to 100 pennies

The price elasticity of demand measuring the price of gasoline in dollars = -0.5

The price elasticity of demand measuring the price of gasoline in pennies would be -0.5×100 = -50