If the price of a cup of coffee increases by 50 percent and the quantity of cups demanded decreases by 50 percent, the price elasticity of demand is:
A) elastic.
B) inelastic.
C) unit elastic.
D) zero.

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 (-50% / 50%) = -1, indicating unit elasticity.

If the Price of a Cup of Coffee Increases by 50