The price of a good rises from N5 to N8 and the... - JAMB Economics 2003 Question
The price of a good rises from N5 to N8 and the quantity demanded falls from 200 to 190 units Over this price range, the demand curve is
A
perfectly inelastic
B
fairly inelastic
C
perfectly elastic
D
fairly elastic
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Correct Option: B
To determine the elasticity of demand, we need to calculate the price elasticity of demand (PED). The formula for PED is:
PED = (% Change in Quantity Demanded) / (% Change in Price)
-
Calculate the Percentage Change in Quantity Demanded:
- Change in Quantity Demanded = 190 - 200 = -10
- Average Quantity Demanded = (200 + 190) / 2 = 195
- % Change in Quantity Demanded = (-10 / 195) * 100 = -5.13%
-
Calculate the Percentage Change in Price:
- Change in Price = 8 - 5 = 3
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