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JAMB Economics 1991 Question 10

Question 10

Elasticity

If the price of a ball point pen falls from N1.00 to N0.60 and the quantity demanded increases from 200 to 300, the point elasticity of demand is equal to

  1. A.1.25
  2. B.0.80
  3. C.0.50
  4. D.0.40
Show the answer and explanation

Answer: A (1.25)

Explanation

Quantity rises by 100/200 = 50% while price falls by 0.40/1.00 = 40%, so elasticity = 50 ÷ 40 = 1.25.