If price elasticity of demand is 0.5, it follows that a _______ percent decrease in price would cause a _______ percent increase in quantity demanded.
A)50; 1
B)0.5; 1
C)0.5; 0.5
D)100; 500
E)2; 1

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, a 2% decrease in price leads to a 1% increase in quantity demanded (0.5 = 1%/2%).

If Price Elasticity of Demand Is 0