Question

If the price elasticity of demand for used cars priced between $4,000 and $6,000 is –1. 2 (using the mid-point method), what will be the percent change in quantity demanded when the price of a used car falls from $6,000 to $4,000?.

Answer 1

The percent change in quantity demanded when the price of a used car falls from $6,000 to $4,000 is -33.33%

How to calculate percentage change in quantity demanded

Elasticity of demand = percentage change in demand / percentage change in price

• Elasticity = -1

% change in price = (2000/6000) * 100

= 33.33 %

Percentage change in demand = -1 × 33.33%

= -33.33%

Price elasticity of demand is the degree of responsiveness of demand to a little change in price

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