Question 15 Solution

P1 = $1.00

P2 = $1.25

Q1 = 16

Q2 = 8

8 – 16 / 8 + 16

E_D = __________

$1.25 - $ 1.00 / $ 1.25 + $ 1.00

1/3

E_D = ______

1/9

E_D = 3.0

Note: The demand curve is elastic in this range.