Answer:
3
Explanation:
Price elasticity of demand refers to degree of responsiveness of quantity demanded to a change in price.
Price elasticity of demand is calculated as;
average price = [tex]\frac{5\ +\ 4}{2}[/tex] = $4.5
Average quantity = [tex]\frac{100\ +\ 50}{2}[/tex] = 75
Elasticity of demand ([tex]E_{d}[/tex]) is given by [tex]\frac{change\ in\ quantity}{average\ quantity}[/tex] ÷ [tex]\frac{change\ in\ price}{average\ price}[/tex]
= [tex]\frac{100\ -\ 50}{75}[/tex] ÷ [tex]\frac{5\ -\ 4}{4.5}[/tex]
= 3
Thus absolute value (ignoring the negative sign of change in prices) of price elasticity of demand is 3.
