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JAMB Economics 1995 Question 20

Question 20

Elasticity

What is the elasticity of demand for commodity X, if at a price of ₦25 the quantity demanded is 80 and when the price is reduced to ₦20 the quantity demanded is 100?

  1. A.1.25
  2. B.1.45
  3. C.0.25
  4. D.0.15
Show the answer and explanation

Answer: A (1.25)

Explanation

% change in quantity = 20/80 × 100 = 25%. % change in price = 5/25 × 100 = 20%. Elasticity = 25 ÷ 20 = 1.25.