When the price of bricks increases 5%,quantity demanded decreases 15%.The price elasticity of demand for bricks is
A) perfectly inelastic.
B) elastic.
C) inelastic.
D) unit elastic.

Question

Quizplus · Accepted Answer

To calculate the price elasticity of demand, we use the formula:

Price elasticity of demand = (% change in quantity demanded) / (% change in price)

Here, we know that when the price of bricks increases by 5%, the quantity demanded decreases by 15%.

So, we can plug these values into the formula:

Price elasticity of demand = (-15%) / (5%) = -3

Since the elasticity is greater than 1, this means the demand for bricks is elastic. In other words, a small change in price leads to a relatively large change in quantity demanded.

When the Price of Bricks Increases 5%,quantity Demanded Decreases 15