Multiple Choice
A firm is observed using 15 units of input X when the price of X is $2,and 10 units of X when its price increases to $4.What is the elasticity of demand for input X in this price range?
A) 0.5
B) 0.6
C) 1.67
D) 2.0
Elasticity of resource demand is the absolute value of the change in quantity of workers divided by the change in resource price.In this case,elasticity is |[(10 - 15) /(10 + 15) ]/[(4 - 2) /(4 + 2) ]| = 0.6.
Correct Answer:
Verified
Correct Answer:
Verified
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