A firm is observed using 15 units of input X when the price of X is $2. If the price of X increases to $4, the firm uses only 6 units of it. What is the price elasticity of demand for input X? (Use the simple formula for percentage change: [(new# − old#)/old#] × 100%.)

Price elasticity demand for input = 0.60

Explanation:

Price elasticity of demand (PED) is the degree of responsiveness of demand to a change in price.  

Where a percentage change in price produces a more than a proportional change in quantity, we say the product is price elastic. On the other hand, where a change in price produces a less than a proportional change in quantity demand, then demand is price inelastic  

PED is computed as follows:  

PED = % change in quantity /% change in Price  

% change in demand = (6-15)/15 × 100 = 60%

% change in price = (4-2 )/2× 100= 100%

PED = 60%/100% = 0.60

Price elasticity demand for input = 0.60