If the price of a ball point pen falls from N1.00 to N0.60 and the quantity demanded increases. from 200 to 300, the point elasticity of demand is equal to____________

  • A 0.50
  • B 0.40
  • C 1.25
  • D 0.80
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The correct answer is C. 1.25

The point elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price.

In this case, the percentage change in quantity demanded is (300 - 200) / 200 * 100% = 50%.

The percentage change in price is (0.60 - 1.00) / 1.00 * 100% = -40%.

Therefore, the point elasticity of demand is 50% / -40% = -1.25.

Therefore, the point elasticity of demand is 1.25

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