Question

When price = $33, quantity demanded = 460. When price = $31, quantity demanded = 500. The price elasticity of demand is _______________, making this an _____________ good in the price range between $31 and $33.

A. 1.33; inelastic
B. 1.33; elastic
C. 0.75; elastic
D. 0.75; inelastic
E. 6,2; elastic

Answer 1

Answer:

• PED = 1.33
• elastic good

Explanation:

to calculate the price elasticity of demand (PED) using the midpoint method = {(500 - 460) / [(460 + 500)/2]} / {(31 - 33) / [(31 + 33)/2]} = (40 / 480) / (2 / 32) = 0.0833 / 0.0625 = 1.33

when the PED > 1, elastic

when the PED < 1, inelastic

when the PED = 1, unitary