If price elasticity of demand is -0.5,
A)a 1% decrease in quantity demanded leads to a 0.5% decrease in price
B)a 1% decrease in price leads to a 0.5% increase in quantity demanded
C)a 50% decrease in price leads to a 1% increase in quantity demanded
D)a 50% decrease in price leads to a 100% increase in quantity demanded
E)demand is elastic

Question

Quizplus · Accepted Answer

A price elasticity of demand of -0.5 means that a 1% decrease in price will lead to a 0.5% increase in quantity demanded. Therefore, choice B is correct. Choices A, C, and D are incorrect because they do not accurately reflect the given price elasticity of demand. Choice E cannot be determined solely based on the given price elasticity of demand.

If Price Elasticity of Demand Is -0.5