Asked by Lucinda Cahill on Jul 14, 2024
Verified
If quantity demanded for rice falls by 4% when price increases 8%,we know that the absolute value of the own-price elasticity of rice is:
A) 2.5.
B) 0.5.
C) 2.
D) 0.40.
Own-price Elasticity
A measure of how much the quantity demanded of a good responds to a change in its own price, often used to understand consumer sensitivity to price changes.
Quantity Demanded
The amount of a good or service that consumers are willing and able to purchase at a particular price.
Rice
A staple food grain consumed worldwide, known for its versatility and ability in serving as a primary source of energy.
- Determine the own-price elasticity of demand and recognize its significance.
Verified Answer
JB
Jasmine BaileyJul 14, 2024
Final Answer :
B
Explanation :
The own-price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is |-4%/8%| = 0.5.
Learning Objectives
- Determine the own-price elasticity of demand and recognize its significance.