If the price of a burger decreases by 5 percent and as a result the quantity of burgers demanded increases by 8 percent, the price elasticity of demand equals
A) 0.60.
B) 0.40.
C) 1.60.
D) 0.625.

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is 8% / -5% = -1.60. Since elasticity is typically expressed as a positive number, the answer is 1.60.

If the Price of a Burger Decreases by 5 Percent