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JAMB Economics 2022 Paper

Question : 12

Total: 82

4.00 \text{ to } \backslash

5.00, the elasticity of demand is

Solution:

Concept:

Price elasticity of demand measures how much quantity demanded changes when price changes.

Explanation:

Initial price,

P = \$4.00

; initial quantity,

Q = 20

units.

New price

= \$5.00

; new quantity

= 30

units.

Change in quantity demanded:

\Delta Q = 30 - 20 = 10

Change in price:

\Delta P = 5 - 4 = 1

Use the elasticity formula:

E_d = \frac{\Delta Q}{\Delta P} \times \frac{P}{Q}

Substitute the values:

E_d = \frac{10}{1} \times \frac{4}{20}

E_d = 10 \times 0.2 = 2.00

The coefficient of elasticity of demand is

2.00

Answer:

2.00

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