If the price of food falls by 10 percent and the quantity sold increases by 5 percent,then the price elasticity of demand in that range equals
A)2,and demand is elastic
B)0.5,and demand is elastic
C)2,and demand is inelastic
D)0.5,and demand is inelastic
E)15,and demand is elastic

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 is 5% / -10% = -0.5, indicating inelastic demand.

If the Price of Food Falls by 10 Percent and the Quantity