If a 5 percent decrease in the price of a good produces a 5 percent increase in the quantity demanded, the price elasticity of demand is:
A) perfectly elastic.
B) perfectly inelastic.
C) elastic.
D) inelastic.
E) unitary elastic.

Question

Quizplus · Accepted Answer

In this scenario, the percentage change in price is equal to the percentage change in quantity demanded (5%). This means the elasticity of demand is equal to 1, which is known as unitary elasticity.

If a 5 Percent Decrease in the Price of a Good