when price = $16, quantity demanded = 200. when price = $14, quantity demanded = 225. the price elasticity…

when price = $16, quantity demanded = 200. when price = $14, quantity demanded = 225. the price elasticity of demand is\n\n○ 0.88.\n\n○ 6.2.\n\n○ 3.2.\n\n○ 22.2.\n\n○ 1.13.

when price = $16, quantity demanded = 200. when price = $14, quantity demanded = 225. the price elasticity of demand is\n\n○ 0.88.\n\n○ 6.2.\n\n○ 3.2.\n\n○ 22.2.\n\n○ 1.13.

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, $Q_1 = 200$, $Q_2=225$. So, $\frac{225 - 200}{\frac{225 + 200}{2}}\times100%=\frac{25}{\frac{425}{2}}\times100%=\frac{25\times2}{425}\times100%=\frac{50}{425}\times100%\approx11.76%$.

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, $P_1 = 16$, $P_2 = 14$. So, $\frac{14 - 16}{\frac{14+16}{2}}\times100%=\frac{- 2}{\frac{30}{2}}\times100%=\frac{-2}{15}\times100%\approx - 13.33%$.

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, $E_d=\frac{11.76%}{-13.33%}\approx - 0.88$. We take the absolute value, so $|E_d|\approx0.88$.

Answer:

0.88