If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units, then demand is
A)elastic
B)inelastic
C)unit elastic
D)0
E)inferior

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, the percentage change in quantity demanded is -20% and the percentage change in price is 100%, resulting in an elasticity of -0.2, which is less than 1, indicating inelastic demand.

If an Increase in the Price of a Product from $100