for a certain good, when price rises from $90 to $98, quantity demanded falls from 90,000 to 86,000. the…

for a certain good, when price rises from $90 to $98, quantity demanded falls from 90,000 to 86,000. the price elasticity of demand here is\n\no 0.796.\n\no 0.53.\n\no 0.65.\n\no 1.87.

for a certain good, when price rises from $90 to $98, quantity demanded falls from 90,000 to 86,000. the price elasticity of demand here is\n\no 0.796.\n\no 0.53.\n\no 0.65.\n\no 1.87.

Answer

Explanation:

Step1: Calculate percentage change in quantity demanded

The formula for percentage change in quantity demanded is $\frac{Q_2 - Q_1}{\frac{Q_2+Q_1}{2}}\times100$. Here, $Q_1 = 90000$, $Q_2=86000$. So, $\frac{86000 - 90000}{\frac{86000 + 90000}{2}}\times100=\frac{- 4000}{88000}\times100\approx - 4.55%$.

Step2: Calculate percentage change in price

The formula for percentage change in price is $\frac{P_2 - P_1}{\frac{P_2+P_1}{2}}\times100$. Here, $P_1 = 90$, $P_2 = 98$. So, $\frac{98 - 90}{\frac{98+90}{2}}\times100=\frac{8}{94}\times100\approx8.51%$.

Step3: Calculate price - elasticity of demand

The formula for price - elasticity of demand ($E_d$) is $E_d=\frac{\text{Percentage change in quantity demanded}}{\text{Percentage change in price}}$. So, $E_d=\frac{-4.55%}{8.51%}\approx - 0.53$. We take the absolute value, and the price - elasticity of demand is $0.53$.

Answer:

0.53