Final answer:
The price elasticity of demand indicates the responsiveness of quantity demanded to a change in price, with a value less than one representing inelastic demand. The given elasticity of 0.45 shows inelastic demand as the price falls from $0.50 to $0.45, suggesting the answer would be b) 0.5; however, exact calculation requires the percentage change in quantity.
Step-by-step explanation:
The price elasticity of demand is a measure of how much the quantity demanded of a good responds to a change in the price of that good. The formula for calculating price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. Since the student has provided that the elasticity of demand is 0.45 when the price falls from $0.50 to $0.45, this indicates that the demand is inelastic in this interval. Price elasticities of demand are always negative; however, we remove the negative sign and use the absolute value for interpretation. In this case, since elasticity is less than one, an inelastic demand is indicated, and the correct answer to the student's question would be b) 0.5
Note: To provide a specific answer, we would need the percentage changes in quantity demanded that correspond to the change in price from $0.50 to $0.45. Without this information, we cannot calculate the exact elasticity, and we cannot confirm that the answer is 0.5 based on the available data.