When the price of cigarettes decreases by 20 percent,the quantity demanded increases by 12 percent.The price elasticity of demand for cigarettes is __________,making cigarettes an ____________ product (in this example).
A) 0.6; elastic
B) 1.7; inelastic
C) 0.6; inelastic
D) 1.7; elastic
E) 2.6; elastic

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is 12% / -20% = -0.6, indicating inelastic demand.

When the Price of Cigarettes Decreases by 20 Percent,the Quantity