JAMB Economics 2023 Paper

Concept:Price elasticity of demand measures how strongly quantity demanded responds to a change in price.Explanation:From the question, initial price is $P_1 = 8$ and initial quantity demanded is $Q_1 = 20$.When price falls, $P_2 = 6$ and $Q_2 = 30$.Change in quantity: $\Delta Q = Q_2 - Q_1 = 30 - 20 = 10$.Change in price: $\Delta P = P_2 - P_1 = 6 - 8 = -2$.Use the elasticity formula:$$E_d = \frac{\Delta Q}{\Delta P} \times \frac{P_1}{Q_1}$$Substitute the values:$$E_d = \frac{10}{-2} \times \frac{8}{20} = -5 \times 0.4 = -2$$The negative sign only shows that price and quantity demanded move in opposite directions.Price elasticity of demand is usually expressed as a positive value, so $E_d = 2$.Answer:D. 2