) Refer to Exhibit 512.What can be said of the price elasticity of demandfor this good?
A)Demand is inelastic.
B)Demand is unit elastic.
C)Demand is elastic.
D)Demand is perfectly elastic.
E)Not enough information is given to determine elasticity.

Question

)  Refer to Exhibit 5­12.What can be said of the price elasticity of demandfor this good?
A)Demand is inelastic. 
B)Demand is unit elastic. 
C)Demand is elastic. 
D)Demand is perfectly elastic. 
E)Not enough information is given to determine elasticity.

Quizplus · Accepted Answer

The price elasticity of demand formula is % change in quantity demanded / % change in price. From Exhibit 5-12, we can see that a 10% increase in price led to a 25% decrease in quantity demanded. Using the formula, we get: (-25%/10%) = -2.5. Since the absolute value of -2.5 is greater than 1, demand is considered elastic. Therefore, the best choice is C.

) Refer to Exhibit 5­12

) Refer to Exhibit 512