If, when price changes by 35 percent, the quantity demanded changes by 7 percent, then the...

Question

Question

If, when price changes by 35 percent, the quantity demanded changes by 7 percent, then the absolute value of the price elasticity of demand is 5.

True

False

Answer 1

Answer #1

The price elasticity of demand is calculated by the ratio of percentage changes of quantity demand to the percentage change in price.

Percentage changes in quantity demand=7

Percentage changes in price=35

So price elasticity of demand=7/35

0.2×100=20

So statement is false.

Answer 2

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