Suppose the price of computers increases from $1000 to $1200. Assuming the original quantity demanded for computers was 50 million units, and the new quantity demanded is 45 million computers, what is the price elasticity of demand, and is the demand for computers elastic or inelastic（）
A. 0.58,
B. -0.58,
C. 1.73,
参考答案：B
解析：
Price elasticity of demand is calculated by dividing the percent change in quantity demanded by the percent change in price, using the average value of the variable in the computations. The percent change in quantity demanded is (45-50)/[(50+45)/2]=-0.105 or -10.5%. The percent change in price is (1200-1000)/[(1000+1200)/21=0.1818 or 18.2%. The price elasticity of demand is -10.5/18.2=-0.58. Since the price elasticity of demand is smaller than 1 (ignore the sign),the demand for computers is inelastic.
