Which one of the following will yield a measured price elasticity of demand of 5.0? A 10 percent rise in price results in a
A)10 percent decrease in quantity demanded.
B)5 percent decrease in quantity demanded.
C)2 percent decrease in quantity demanded.
D)50 percent decrease in quantity demanded.
E)0.5 percent decrease in quantity demanded.

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. So, a measured price elasticity of demand of 5.0 means that a 10% change in price will result in a 50% change in quantity demanded. Therefore, option D, which states that a 10% rise in price results in a 50% decrease in quantity demanded, is the correct answer.

Which One of the Following Will Yield a Measured Price