Question 17
ElasticityUse the table below to answer this question.
Market Demand Schedule for Commodity X.
Price (₦) | Quantity (million units)
60 | 100
50 | 140
40 | 220
30 | 260
20 | 300
10 | 340
If the price of commodity X falls from ₦40.00 to ₦30.00 what is the price elasticity of demand?
- A.0.62
- B.0.73
- C.1.00
- D.1.50
Show the answer and explanation
Answer: B (0.73)
Explanation
Quantity rises from 220 to 260, a 40/220 = 18.2% change. Price falls by 10/40 = 25%. Elasticity = 18.2 ÷ 25 ≈ 0.73.