If the quantity demanded of a commodity increases from 20 units to 30 units when there is an increase in price from $4.00 to$5.00, the elasticity of demand is

Analyze the question: Quantity demanded goes from 20 to 30 as price goes from $4 to$5. We need the price elasticity of demand (PED).

Concept: PED = % change in quantity demanded ÷ % change in price

(Using the original values as the base, which is the standard approach in JAMB.)

Solution:

• Change in quantity = 30 − 20 = 10
• % change in quantity = (10 ÷ 20) × 100 = 50%

• Change in price = 5 − 4 = 1
• % change in price = (1 ÷ 4) × 100 = 25%

PED = 50% ÷ 25% = 2.00

(The sign would technically be positive here because quantity and price moved in the same direction, which is unusual for a normal good. Economists ignore the sign and use the absolute value, so we take 2.00.)

Check with the midpoint method (for comparison):

• % change in Q = 10 ÷ 25 = 40%
• % change in P = 1 ÷ 4.5 = 22.2%
• PED = 1.8, which is not among the options, so the standard (original-value) formula is the one intended.

Answer: C. 2.00

Exam tip: Use this form: PED = (ΔQ ÷ Q₁) ÷ (ΔP ÷ P₁). Always divide by the original values unless the question says "midpoint" or "arc" elasticity. A value greater than 1 means demand is elastic.