If a 5 percent fall in the price of a product causes the quantity demanded of the product to increase by 10 percent,the demand is:
A) inelastic.
B) elastic.
C) unit elastic.
D) perfectly elastic.

Question

Quizplus · Accepted Answer

If a 5 percent fall in price causes a 10 percent increase in quantity demanded, the demand for the product is elastic. This means that consumers are sensitive to price changes and a small decrease in price causes a relatively large increase in quantity demanded.

If a 5 Percent Fall in the Price of a Product