What is the elasticity of demand for peanut butter when the price changes from $2.00 to $0.40 as shown by this supply and demand curve?
(1 point)
0.2
0.5
0.004
5
To determine the elasticity of demand, we need to use the formula:
Elasticity of Demand = (% Change in Quantity Demanded) / (% Change in Price)
Given that the price changes from $2.00 to $0.40, and assuming the quantity demanded is changing proportionately, we can calculate the percentage change in quantity demanded as:
% Change in Quantity Demanded = ((2 - 0.40) / 2) * 100 = 160%
The percentage change in price is:
% Change in Price = ((0.40 - 2) / 2) * 100 = -80%
Now we can plug these values into the formula:
Elasticity of Demand = (160% / -80%) = -2
The elasticity of demand for peanut butter based on this supply and demand curve is 2. However, since elasticity measures the responsiveness of demand to price changes, it should be positive. Therefore, the correct answer is 2.
To calculate the elasticity of demand for peanut butter when the price changes from $2.00 to $0.40, we need to use the formula:
\[Elasticity = \frac{{\% \text{ Change in Quantity Demanded}}}{{\% \text{ Change in Price}}}\]
First, let's calculate the percentage change in quantity demanded:
\[% \text{ Change in Quantity Demanded} = \frac{{\text{New Quantity Demanded} - \text{Original Quantity Demanded}}}{{\text{Original Quantity Demanded}}} \times 100\]
In this case, since the quantity demanded is not given, we can't calculate the percentage change in quantity demanded. Therefore, we can't determine the elasticity of demand for peanut butter with the given information.
To calculate the elasticity of demand for peanut butter when the price changes, we need to know the percentage change in quantity demanded and the percentage change in price.
The formula for elasticity of demand is:
Elasticity of Demand = Percentage Change in Quantity Demanded / Percentage Change in Price
To find the percentage change in quantity demanded, we can use the following formula:
Percentage Change in Quantity Demanded = (New Quantity Demanded - Old Quantity Demanded) / Old Quantity Demanded * 100
To find the percentage change in price, we can use the following formula:
Percentage Change in Price = (New Price - Old Price) / Old Price * 100
Given that the old price is $2.00 and the new price is $0.40, we can calculate the percentage change in price:
Percentage Change in Price = ($0.40 - $2.00) / $2.00 * 100 = -80%
Now let's look at the supply and demand curve. Based on the information provided, we can determine the old quantity demanded and the new quantity demanded.
However, the information about the quantities is missing from the question. Without this information, we cannot calculate the percentage change in quantity demanded or the elasticity of demand. Therefore, the provided graph is insufficient to answer the question and determine the elasticity of demand for peanut butter.
Please provide the quantities (old and new) or any other relevant information from the supply and demand curve to continue answering the question.