What would be the consequences of a 10 percent decrease in price for a good whose price elasticity of demand is 5?
A) A 50 percent decrease in quantity demanded
B) A 5 percent increase in quantity demanded
C) A 50 percent increase in quantity demanded
D) A decrease in quantity demanded by 1/5
E) An increase in quantity demanded by 1/5

Question

Quizplus · Accepted Answer

According to the formula for price elasticity of demand, a 10% decrease in price would result in a 50% increase in quantity demanded (5 x 10% = 50%). So, option C is correct.

What Would Be the Consequences of a 10 Percent Decrease