Suppose a 10 percent increase in the price of textbooks decreases the quantity demanded by 20 percent. The elasticity of demand for textbooks is
A) 0.2.
B) 2.0.
C) 5.0.
D) 10.0.

Question

Quizplus · Accepted Answer

The elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is -20% / 10% = -2.0. The negative sign indicates that the demand is elastic.

Suppose a 10 Percent Increase in the Price of Textbooks