The price elasticity of demand is 5.0 if a 10 per cent increase in the price results in a _______ decrease in the quantity demanded.
A) 10 per cent
B) 50 per cent
C) 5 per cent
D) 2 per cent

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. If a 10% increase in price leads to a 50% decrease in quantity demanded, the elasticity is 50%/10% = 5.0, matching the given elasticity.

The Price Elasticity of Demand Is 5