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JAMB Economics 1998 Question 17

Question 17

Elasticity

Given that the elasticity of demand for a commodity is 2.5, the percentage change in the quantity demanded as a result of a 10 per cent change in its price is

  1. A.0.25
  2. B.0.40
  3. C.4.00
  4. D.25.00.
Show the answer and explanation

Answer: D (25.00.)

Explanation

% change in quantity = elasticity × % change in price = 2.5 × 10 = 25%.