When the price of flowers decreases by 20 percent, Anarosa buys 10 percent more flowers. Anarosa's price elasticity of demand is equal to _____, and her demand is:
A) 2; elastic.
B) 0.5; unit elastic.
C) 0.5; inelastic.
D) 2; inelastic.

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it's 10% / -20% = -0.5, indicating inelastic demand.

When the Price of Flowers Decreases by 20 Percent, Anarosa