If the price elasticity of demand for a product is equal to 0.5, then a decrease in price of 10 percent will increase quantity demanded by
A)20 percent.
B)0.5 percent.
C)5 percent.
D)0.05 percent.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. If elasticity is 0.5 and price decreases by 10%, the quantity demanded increases by (0.5 * 10%) = 5%.

If the Price Elasticity of Demand for a Product Is