Answer:
The correct answer is option B.
Explanation:
The price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month.
Price elasticity of demand
= [tex]\frac{\frac{Q2-Q1}{\frac{Q2+Q1}{2}}}{\frac{P2-P1}{\frac{P2+P1}{2}}}[/tex]
= [tex]\frac{\frac{80-100}{\frac{80+100}{2}}}{\frac{7-5}{\frac{7+5}{2}}}[/tex]
= [tex]\frac{\frac{-20}{90}}{\frac{2}{6}}[/tex]
= [tex]\frac{-0.222}{0.333}[/tex]
= -0.666 or 0.67
