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2026 PEA Q24

Half the total quantity is purchased by 7575 consumers each with price elasticity 22, and the other half by 2525 consumers each with price elasticity 33. What is the aggregate price elasticity for the 100100 consumers?

Reveal answer and solution

Answer

C

Solution

  1. 1

    The market elasticity is the quantity-share-weighted average of group elasticities. With each group accounting for 50%50\% of the quantity:

  2. 2
    ε=12⋅2+12⋅3=2.5. \varepsilon = \tfrac{1}{2}\cdot 2 + \tfrac{1}{2}\cdot 3 = 2.5.

Answer structure / marking notes

Weights are by quantity (or revenue, given a common price), not by number of consumers.

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Content note

Imported from public/resources/isi/msqe/solutions/pea/2026/ISI_MSQE_PEA_2026_Solutions.tex. Question wording is retained from the available local TeX source; incomplete option blocks or ambiguous source status are flagged for review.