If the price elasticity of demand for air travel is 4:
A)a 20% decrease in the price of air travel will increase quantity demanded by 80%.
B)the demand for air travel is inelastic.
C)a 10% increase in the price of air travel will increase quantity demanded by 40%.
D)a 20% increase in the price of air travel will increase quantity demanded by 80%.

Question

Quizplus · Accepted Answer

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. An elasticity of 4 means that a 1% decrease in price would lead to a 4% increase in quantity demanded. Therefore, a 20% decrease in price would result in an 80% increase in quantity demanded.

If the Price Elasticity of Demand for Air Travel Is