If the quantity axis for coal is changed from pounds to kilograms, the price elasticity of demand for coal becomes

If the quantity axis for coal is changed from pounds to kilograms, the price elasticity of demand for coal becomes

• A. More elastic
• B. Neither more nor less elastic
• C. Less elastic
• D. Undefined

Answer: (B)

Price elasticity of demand is the ratio of the percentage change in quantity demanded to the percentage change in price. This measure depends on relative, not absolute, changes, so changing the units used for quantity doesn’t alter it. If you switch from pounds to kilograms, every quantity value is scaled by a constant factor, so ΔQ and Q both get scaled by the same factor. That makes (ΔQ/Q) unchanged. The price change term remains the same in percentage terms as long as price is measured consistently with the quantity unit. Because the two percent changes stay the same, the elasticity itself does not change. So the elasticity is neither more nor less elastic.

Price elasticity of demand is the ratio of the percentage change in quantity demanded to the percentage change in price. This measure depends on relative, not absolute, changes, so changing the units used for quantity doesn’t alter it. If you switch from pounds to kilograms, every quantity value is scaled by a constant factor, so ΔQ and Q both get scaled by the same factor. That makes (ΔQ/Q) unchanged. The price change term remains the same in percentage terms as long as price is measured consistently with the quantity unit. Because the two percent changes stay the same, the elasticity itself does not change. So the elasticity is neither more nor less elastic.