Final answer:
The elasticity of demand is a measure of the responsiveness of quantity demanded to a change in price. The elasticity of demand as price falls from 5 to 4 is 1.25, and the elasticity of demand as price falls from 9 to 8 is 2.
Step-by-step explanation:
The elasticity of demand is the measure of the responsiveness of quantity demanded to a change in price. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
When the price falls from 5 to 4, the percentage change in price is ((4 - 5) / 5) * 100 = -20%. The percentage change in quantity demanded is ((2/5 - 2/4) / (2/5)) * 100 = -25%. Therefore, the elasticity of demand as price falls from 5 to 4 is (-25%) / (-20%) = 1.25.
When the price falls from 9 to 8, the percentage change in price is ((8 - 9) / 9) * 100 = -11.11%. The percentage change in quantity demanded is ((2/9 - 2/8) / (2/9)) * 100 = -22.22%. Therefore, the elasticity of demand as price falls from 9 to 8 is (-22.22%) / (-11.11%) = 2.
These answers are not expected to be the same because the elasticity of demand depends on the magnitude of the price change and the initial quantity demanded.