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
2.00
0.50
0.65
2.50
Correct answer is A
e= ∆Qd/∆P x P/Qd
= 30 - 20/ 5 - 4 x 4/ 20
= 10/1 x 4/20
= 2