Final answer:
To calculate the price elasticity of demand using the arc method, find the percentage change in quantity and price, and then divide them. The elasticity of jelly coconuts between $50 and $150 is 0.2, indicating inelastic demand.
Step-by-step explanation:
The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. To calculate it using the arc method, we need to find the percentage change in quantity and the percentage change in price. In this case, the price rises from $50 to $150, and the quantity changes from point J to point K. From the given information, we can calculate the percentage change in price (200%) and the percentage change in quantity (40%).
The price elasticity of demand formula is:
Elasticity = (Percentage change in quantity demanded) / (Percentage change in price)
Substituting the values:
Elasticity = 40% / 200% = 0.2
Since the elasticity is less than 1, the demand for jelly coconuts is considered inelastic.