If a 10 percent rise in airfares leads to a 5 percent increase in total expenditures on air travel, the price elasticity of demand for air travel in this range must be
A) 2.
B) elastic.
C) 0.5.
D) inelastic.

Question

Quizplus · Accepted Answer

The price elasticity of demand is inelastic because the percentage change in quantity demanded (5%) is less than the percentage change in price (10%), indicating that demand is not very responsive to price changes.

If a 10 Percent Rise in Airfares Leads to a 5