When the price of sneakers decreases by 10 percent, Anaiah buys 40 percent more flowers. Anaiah's price elasticity of demand is equal to _____, and his demand is:
A) 0.25; inelastic.
B) 4; unit elastic.
C) 4; elastic.
D) 2; inelastic.

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 (40%/10%) = 4, indicating that demand is elastic since the elasticity is greater than 1.

When the Price of Sneakers Decreases by 10 Percent, Anaiah