Suppose that along a given demand curve, price goes up by 10 percent, decreasing quantity demanded by 5 percent. The price elasticity of demand is:
A)50.
B) -2.
C) -1/2.
D) impossible to calculate without specific prices and quantities.

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, it is -5% / 10% = -0.5 or -1/2.

Suppose That Along a Given Demand Curve, Price Goes Up