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?

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A. 2.00
B. 0.50
C. 0.65
D. 2.50

Correct Answer: Option A
Explanation
e = ∆Qd/∆P x P/Qd

= 30 – 20/ 5 – 4 x 4/ 20

= 10/1 x 4/20

= 2

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