Refer to the above table. What is the absolute price elasticity of demand if a price falls from $7 to $6.50?

A) 0.85
B) 1.08
C) 1.17
D) 0.92

Answer: C) 1.17

That means,

Q2 = 60

Q1 = 55

P2 = $6.50

P1 = $7

So,

Ed = [(60 - 55) / {(55 + 60) / 2}] / [($6.50 - $7.00) / {($7.00 + $6.50) / 2}]

Ed = - 1.17

That means the absolute value of Ed is 1.17.