NABTEB Economics 2022 Objective — Question 9

Question 9 of 50 from the National Business and Technical Examinations Board (NABTEB) Economics 2022 Objective paper, with the correct answer and a full explanation.

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

A. 0.50
B. 0.65
C. 2.00Correct
D. 2.50

Explanation

%change in Qd = (30-20)/20 x100 = 50%. %change in Price = (5-4)/4 x100 = 25%. PED = 50%/25% = 2.00.

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