Suppose that the value of the price elasticity of demand for a product is 0.5 and its price decreases by 10%.What will happen to the quantity demanded?
A)It will increase by 5%.
B)It will increase by 20%.
C)It will decrease by 5%.
D)It will decrease by 20%.
E)It cannot be determined without further information.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. With an elasticity of 0.5 and a price decrease of 10%, the quantity demanded will increase by 5% (0.5 * 10%).

Suppose That the Value of the Price Elasticity of Demand