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

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. With an elasticity of 5.0, a 10% increase in price results in a 50% decrease in quantity demanded (5.0 = x/10, where x = 50).

The Price Elasticity of Demand Is 5