The price of gasoline rises by 1%, and the quantity of gasoline purchased falls by 5%. The price elasticity of demand is equal to _____, and demand is described as _____.
A)0.2; inelastic
B)5; inelastic
C)0.2; elastic
D)5; elastic

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is -5% / 1% = -5, which indicates that demand is elastic.

The Price of Gasoline Rises by 1%, and the Quantity