Suppose a 1 percent in the price of a good results in the quantity demanded changing by 0.2 percent. Then you know
A)the price elasticity of demand is 0.2.
B)nothing about slope or price elasticity of demand based on this information.
C)the price elasticity of demand is 5.
D)the slope of the demand curve is 5.
E)the slope of the demand curve is 0.2.

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, which in this case is 0.2/1 = 0.2.

Suppose a 1 Percent in the Price of a Good