If a 5% increase in price leads to an 8% decrease in quantity demanded, demand is
A)perfectly elastic
B)elastic
C)unit elastic
D)inelastic
E)perfectly inelastic

Question

Quizplus · Accepted Answer

If a 5% increase in price leads to an 8% decrease in quantity demanded, the percentage change in quantity demanded is greater than the percentage change in price (8% > 5%). This indicates that the demand is elastic, meaning consumers are sensitive to changes in price. If demand were inelastic or unit elastic, the decrease in quantity demanded would be less than the increase in price.

If a 5% Increase in Price Leads to an 8