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which of the following is true about the elasticity of demand for this product at the prices given?
Ullowing information to answer questions 12 and 13. A company is currently selling 100,000 products a year at a price of $10
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Answer #1

Answer

Option a

Elasticity of demand=(change in quantity/average quantity)/(change in price/average price)
Change in quantity=110000-100000=10000
average quantity=(110000+100000)/2=105000
change in price=8-10=-2
average price=(8+10)/2=9
Elasticity of demand=(10000/105000)/(-2/9)

=-0.428571429

=0.4 (absolute value)

The elastcity is below 1 so it is inelastic.

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