If the quantity demanded of a commodity increases from 20 units to 30 units when there is an increase in price from $4.00 to $5.00, the elasticity of demand is
-
2.00
- 0.50
- 0.65
- 2.50
The correct answer is: A
Explanation
e = ∆Qd/∆P x P/Qd
= 30 - 20/ 5 - 4 x 4/ 20
= 10/1 x 4/20
= 2